From Mondragon to America: Experiments in
Community Economic Development
by Greg MacLeod. University College of Cape Breton Press, Sydney, Nova Scotia, 1997, pp. 186.
While there is always room on a co-operative bookshelf for another good history of the development of the Mondragon family of co-operative enterprises, the particular contribution of this book is to analyse the extent to which the Mondragon experience is relevant to community economic development in other countries.
Although it is often commonly assumed that the particular combination of Basque nationalism and geographical isolation make the Mondragon success story difficult to replicate elsewhere, the author demonstrates how the Mondragon story is in fact based on several fundamental characteristics of a more universal nature.
Time and again the author returns to the concept of values. The Mondragon pioneers, and its modern-day managers, have been guided by a commitment to local and community well-being. Profit is a means rather than a goal in itself. While it may be that such values predominate in disadvantaged communities, one need only think of the recent experience of the Co-operative Bank in the U.K. to realise that no one has a monopoly on the successful application of such values.
The author also identifies management as an essential, and often underrated, element in the Mondragon success. The Mondragon pioneers strongly condemned the "false democratism" by which managers were subject to unending scrutiny and supervision by the members. While ultimate control remains with the members, the manager is given clear authority to manage as long as he respects the objectives of the organisation. Here we find echoes of the modern management concept of "value-based management" which is undoubtedly one of the keys to co-operative success.
While not disregarding the importance of capital for new economic ventures, the author suggests that good business concepts, properly prepared and presented, stand a good chance of finding economic support. The author's concept of community development is based on "community business corporations" in order to emphasise the economic discipline which must prevail.
With respect to the argument about "growth vs. participation", the author comes down clearly on the side of growth. The Eroski consumer co-operatives could not have met the challenge of large retailers if they had remained small, local entities. Furthermore, the Mondragon system could not have met its objective of creating new jobs (8,800 during the present five-year period) if it had not expanded into new sectors of production.
Finally, the author uses the Mondragon experience to argue the case of adaptability over dogma. While committed to the values of community development, Mondragon enterprises have not hesitated to do business with foreign, investor-owned companies. Similarly, while strong on capital control, they are weak on gender equality. Successful community enterprises, the author concludes, "seem to be the ones that maintain a set of ideals and values but who admit that these cannot be all achieved."
Enterprise Co-operation in Social Economy
by Rafael Chaves
In the last few years, all the enterprises have been placed in an increasingly dynamic internationalised and highly competitive enviroment. Within this context, they have been encouraged by the larger need for flexibility, creativity and dynamism to develop new ways of organisation and economy concentration such as holdings, enterprise groups, etc. But at the same time new ideas based on enterprise co-operation - such as model enterprise webs particularly relevant to small and medium-sized enterprises, which lately have acknowledged that it is more difficult to survive in isolation- were brought to light.
In the first part of the book, enterprise co-operation is analysed from a purely theoretical point of view, studying the forms, advantages and risks that are implied in the world of business.
Enterprise co-operation and, in a more general concern, enterprise webs are seen as a phenomenon which is difficult to define since as yet it has not been thoroughly explained.
From the wide scope of literature available on this topic, we can highlight that this reality exists further than a theoretical frame, since when we get deeper into the contents we find ourselves surrounded by complex dimensions which need a permanent review of the topics. In this sense, the nature of co-operation, its distinctive features and its different modes connecting it with the idea of inter-co-operation are analysed. Besides, the advantages and motivations that justify the establishment of co-operation agreements are tried to be identified by a review of the literature.
Other topics, such as the logic issue of activation, development, evolution and involvement of co-operation processes, are also researched. By the end of the first part of the book, certain theoretical elements are given, enabling us to know and learn about the mesoeconomic scenery as an authentic theatre of performance and interaction between the enterprise and its surroundings.
In the second part of the book, the author carries out a study on the importance, role and extension of co-operation in the second pole of Social Economy. An investigation was performed on a group of enterprises, some of them were organised as associated work co-operatives and others were working companies from Valencia, Spain, wich are involved in the textile and furniture industry.
These company manifestations and their shared problems are analysed first so that, according to the case methodology, different experiences are studied according to the theoretical elements of the first part of the book. By this means, the intention is to identify the main manifestations of existing enterprise co-operation, assessing not only its econcomical functions and objectives, but also the role it plays in the local enterprise development.
Lastly, it is shown that when this model is carried out, it can give birth to important comparative advantages which reaffirm the sector of social economy and that benefits are not only based on scale economy effects but also on qualitative effects. It also proves that enterprise co-operation generates positive effects to the increment of the economical efficiency, which makes us consider once again the benefits of enterprise co-operation as a basic instrument for the local development.
- Carlos Alberto Farias
Problems of Turkish Co-operative Movement and its Development Prospects
by Prof. Dr. Ziya Gokalp Mulayim, Published by the Friedrich-Ebert Foundation, Istanbul, 1997 (revised 2nd edition)
The political instability in Turkey has adversely affected the development of he co-operative movement. When the political environment was favourable, particularly in late 1960s and 1970s, the movement was in full swing toward achieving its objectives by establishing its higher organizations and starting to play a dominant role in production and marketing of major agricultural products. The Co-operative Act No. 1163 of 1969 made possible the establishment of democratically-established cooperatives and their recognition by the State. These new-wave co-operatives were alternatives to the State-initiated co-operatives. Among them, KOY-KOOP, the largest and most influential one, both economically and politically, was established in 1971 due to this new law, and joined the ICA in 1978.
Prof. Mulayim was a member of the board of KOY-KOOP (Central Union of Village Development Co-operatives) before it was closed down by the military government in 1980. He was among the few who continued to defend democratic rights of the executives jailed by the military. KOY KOOP was never reopened and, according to Mulayim, this was because of the influential vested interests. He later assisted YOL-KOOP (Union of Workers Consumer Co-operative Societies) in joining the ICA when the restrictions imposed by the military government were softened in 1981.
However, even under the favourable political conditions, the co-operative movement could not solve its major problems in becoming economically self-reliant. As catogorized by Mulayim, these problems were, and still are, finance, higher level organizational set up, training and research, legislation and auditing.
The financial problems of co-operatives have resulted from two main structural weaknesses: low level of membership contributions as share capital which limits capital formation, and lack of a special support institution to collect members' savings to use them for financial needs of the movement. The initiative to establish a cooperative bank dates back to 1974, according to Mulayim, when a draft bill was produced and submitted to the Parliament. The Ecevit Government, which came to power promising to make all the necessary regulatory provisions favourable for the free development of co-operatives, including the establishment of a co-operative bank, could not succeed. Even today, the movement suffers due to lack of a national financial institution, owned and run by cooperatives.
The Turkish co-operative movement did not have a national apex organization up until 1991 when the National Co-operative Union of Turkey (TURKIYE-KOOP) was established. Still, in some sectors such as rural development (KOY-KOOP), workers co-operatives, banking, insurance, tourism, etc., central unions are yet to be established. Mulayim therefore suggests that the National Union should assist these types of co-operatives in completing their sectoral higher level organizations and it should also join the International Co-operative Alliance (the decision in General Assembly has already been taken in 1996 to join the ICA) in order to be able to represent the entire movement in the world assembly.
Education and training (Mulayim refers to training and research) problems of the movement need to be taken into account to help co-operatives to train qualified cadres and staff. According to Mulayim, co-operative education and training has been neglected in Turkey knowingly or unknowingly. To solve the problem, he suggests that the State, as well as the higher level co-operative organizations, should take steps at various levels to create co-operative training institutes. The universities should also pay attention to studies and research on co-operatives through the establishment of special insitutes in their structures. A particular reference is made to the initiative of the ILO in 1995 aimed at assisting the Turkish co-operative movement in establishing a National Co-operative Training Centre which is still under consideration for funding.
As for legislation, Professor Mulayim indicates that the laws governing co-operatives in Turkey are inadequate, complex and largely undemocratic. Some agricultural co-operatives are still under the control of the State. In his view, there should be one general cooperative law for all types of co-operatives which could be made by revising the existing Co-operative Law No. 1163 and expanding its coverage to include all agricultural and non-agricultural co-operatives.
Co-operatives are primarily audited by the State and are therefore not being audited effectively. Mulayim believes that the most effective way to solve the problem would be to allow co-operatives to audit themselves through their higher level organizations and/or through a co-operative bank.
In the final chapter, under the conclusions and evaluation, Mulayim gives a brief historical account with references to the development of co-operative movements in the Western countries, particularly in the EU countries, and suggests that these five fundamental problems of the movement should be solved without delay if a strong and self-reliant movement is expected to emerge in Turkey.
- Huseyin Polat (ILO)
Libro Blanco de la Economia Social en la Comunidad Valenciana
Tomas-Carpi, J.A. and Monzon, J.L. (Dir) (1997): , Ciriec-Espana editorial, Valencia. (White Book on the Valencian Social Economy, Spanish), 601 pp.
The "White Book on the Valencian Social Economy" was prepared with the help of a multi-disciplinary team drawn from the academic staff of the Valencian universities (Spain). It provides a field study, analysis and exploration of the social economy of the Valencia region in the mid 1990's, with particular reference to workers cooperatives, labour-owned companies, agricultural cooperatives and the new social economy organizations concerned with the production and distribution of social welfare services. It examines the contributions they make in terms of job creation, reducing geographic imbalances, creating new sources of wealth, providing social services and facilitating employment and social integration among disadvantaged groups. The main emphasis of the White Paper is to assess the major deficits and imbalances of the Valencia region's social structure and economy and to analyze the role that the social economy organizations can play in overcoming them. There is also a chapter on the other traditional social economy organizations such as credit, consumers, service, electricity, housing and transport co-operatives, mutual insurance societies,associations and foundations.
Small Business: A Study of a Fijian Family - the Mucanabitu Iron
Works Contractor Co-operative Society
by Qalo, Ropate, Rakuita (1997), published by Suva, Fiji, Start Printery, xxiii + 227 pp + bibliography + 53 photos; ISBN: 982 365 001 2.
The promotion of worker co-ops as part of the burgeoning third sector of the economy makes sense today since both traditional private and public forms or organising work and production reveal their limitations in confronting mass structural unemployment in most of the industrialised world. This socio-economic justification for promoting worker co-operatives is timely, given that the ideological argument has been largely responsible for worker co-operative promotion in the Western World. Elsewhere, however, the cultural disposition for co-operative ways of working is well entrenched. In the South Pacific, principles of mutual assistance and obligation as well as a collective tenure of property right have a long history and became even more salient as marks of local identity in the face of encroaching capitalism and its totally different approach towards the allocation of resources. The co-operative formula has found a natural cultural framework in many of these small island societies and, in some cases, the co-operatives are the largest private industries and even larger employers than the state.
Fiji is one of the largest states in the South Pacific and the Mucunabitu Iron Works (MIW) is a steel fabrication contractor set up in 1983 by 16 members of the Mucunabitu family.
The going has been tough. Dr. Qalo meticulously documents the main areas of tension, so typical of micro-enterprises where the separation between business and family is fraught with emotion and uncertainty. Many of the co-operative's members had no idea of how to run a commercial operation. Discipline and authority were not easy to exercise among family members, and those in the co-op's top management cadre were not necessarily the senior members of the family. Various family members expected to use the funds and assets of the co-op to finance family functions such as parties, funerals and receptions.
Dr. Qalo attributes MIW's continued success to the wisdom and foresight of its General Manager, affectionately known as Uncle Isaac, who continues to balance the co-operative between family and business obligations, while ensuring liquidity thanks to the excellent work contacts and a track record of proven projects - the latter include the country's biggest engineering structure, the large hanger for Air Pacific aeroplanes at Nadi International Airport.
The book is an engrossing text, one of the few around which document a Pacific co-operative case study from an essentially sociological perspective. The script is also a saga of how deeply held values and tradition somehow try to ride, rather than being swamped by the waves of globalization from which not even small island nations can escape.
- Godfrey Baldacchino
by Eric Bidet, Le Monde Poche, Paris, 1997, 214 pp. Index, ISBN 2-501-02601-2
What is the common denominator between an important banking institution, a mutual where one sends invoices for reimbursement of medical expenses, a non-governmental organisation where one makes a donation at the end of the year, and a community association delivering evening classes or providing sports activities ?
All these examples, apart from their deceptive diversity, have one thing in common, they belong to the same sector, the social economy, and they show at which point the social economy is part of everyday life, even if the conscience of its existence is lacking and the recognition of sector as a totality is deficient.
Eric Bidet's book is vividly written and thoroughly documented. It fulfils the useful role of giving an image to a sector which has no image. The first chapters set the historical background to the notion of social economy as a middle way between capitalist and public economy. The term first invented in the 19th century was developed in the twenties and has gained institutional recognition in France in the seventies. Today it describes a group of organisations which are different from those of the capitalist sector and those of the public sector by their legal nature, their objectives and their operating procedures.
The French social economy sector has achieved major progress over the past years, spreading to all spheres of economic life. The co-operatives together with mutuals, credit and insurance co-ops have a preponderant place in the agricultural sector. According to estimates, 90% of French farmers are members of at least one co-operative society. The most popular are the co-ops for common utilisation of agricultural machinery, then agro- food co-ops which have 65% of the national market in wine production and 42% in dairy production. The small world of worker co-ops - marginal by figures but important as a symbol and reference point whenever the discussion about the functions of the enterprise arises - is competitive in areas where high skills are required rather than capital. The book considers international ramifications of the co-operative movement, discusses the dangers of European construction and mentions in particular the ICA revision of the co-operative principles in 1995 as an attempt to provide co-operatives with a conceptual framework for the new century.
However, notes Eric Bidet in the final chapters of his book, the recent evolution of the economic situation tends to increase the risk for social economy enterprises to lose their identity. Built on the basis of the priority of the human aspect over capital they used to receive special treatment from the public authorities specific markets and tax exemptions). These conditions helped them develop their activities with financial public subventions and contribution from members. After years of development their advantages faded and their activities needed additional financing. The competition compelled them to raise capital away from their original membership which subsequently inflated the price of financing and modified the membership basis. Introduction of the category of non- member affiliates, creation of commercial companies by mutuals, enlargement of membership privileges to customers will certainly alter the democratic process which is inherent to co-operative functioning. In the society where the access to the work market is a more important issue, the social economy enterprise may bring a substantial contribution if it consents to convert a part of its finances to the creation of employment, a factor which remains in tune with co-operative values.
Le cooperative sociali tra impresa e solidarieta
by Claudio Travaglini, CLUEB Bologna,1997, 214pp, ISBN 88-8091-566-5
The book tries to answer the following question positively: is it possible to establish a network of co-operative enterprises, which maintain their economic efficiency whilst realising actions of social solidarity, transforming the problem of social needs at individual and community level into opportunities for job creation and development promotion?
Referring to the experiences of social care co-operatives of Italy, the publication analyses the following aspects of these co-operatives: the economic and management characteristics of the enterprises; the social responsibility of the enterprises and of the co-operatives of social care in particular; the economic and social balance-sheet of the co-operatives; the forms of production of social services of the co-operatives. The models of social care co-operatives are compared with the general model of the co-operatives based on the principle of mutuality, and the principles and practices adopted by the social care co-operatives are explained , particularly with reference to the Co-operatives Principles of the ICA and to the Ethic Code of Practice established by Federsolidarietą, the national union of social care co-operatives of Italy.
The writer is a researcher of the Department of Economy and Business Administration and gives master courses on Co-operative Economy at the University of Bologna.
- Arsenio Invernizzi
The Strategic Development of Credit Unions
by Charles Ferguson and Donal McKillop, (ISBN 0-471-96912-5), published by John Wiley & Sons Ltd, 1997, 260 pp., price $ 85.00
Credit unions will continue to advance as important institutions in many societies. This prediction is a result of the detailed analysis given in the work of Charles Ferguson and Donal McKillop. The authors' major issue in this work is to analyse the conditions for the future development of credit unions in the UK. They present an in-depth analysis of the current situation of the UK credit union movement. They provide a broad overview of the legislative and structural framework the credit unions have to deal with, the current role and function of credit unions and the credit union trade bodies, as well as a detailed analysis of the economic viability, the operational efficiency and the member group orientation of UK credit unions.
Two case studies of a community-based and an employer-based credit union show that the rapid growth of employer-based credit unions may appear to be a catalyst that generates significant overall expansion in the credit union movement. The authors stress the necessity of a deposit insurance mechanism in transition industries, which is in their view an imperative for the future development of the UK credit union movement. Furthermore, they outline the design of an optimal deposit insurance mechanism for the current UK credit union system. The book doesn't only present a profitable and detailed analysis of the credit union movement in the UK and starting points for its strategic development, but also an analytical framework of a development typology for comparative analysis which is valued by all experts and researchers who work on credit unions. Therefore, the authors divide the credit union movement into three ideal-types: mature, transition and nascent credit union industries. This means an ideal-type evolution model of credit unions from traditional self-help organisations in nascent credit union industries as in developing countries and the former Central and Eastern Bloc countries, to transition industries as in the UK or New Zealand, and further to mature credit union industries as for example in North America and Australia.
The authors emphasise that it must be recognised that such a model cannot mask the importance of variations in specific factors, e. g. historical and cultural, and that this model doesn't outline a general blueprint of the development of credit unions in a deterministic way.
There is lot of evidence, though, that this model enables an understanding of key determinants of the development of credit union industries and that such an ideal-type framework is valuable as an heuristic scheme in analysing and for a better understanding of the development of credit union industries.
The presented case-studies of North American credit union industries are comparative illustrations of a possible development of transition credit union industries as outlined for the UK. One significant challenge for the transition industries and the viability of credit unions is the need to liberalise the common bond. The common bond is seen as a strength but equally an Achilles' heel of credit unions. The important question is: if and how credit unions are able to anticipate the necessities to be more business orientated in a deregulated and more competitive environment. A viable and successful future of credit unions needs product diversification and the offer of products and services in new financial areas based on market rate structures. Is the development of mature and transition credit union industries driven by the market conditions, or is the credit union movement able to transform their key values corresponding to the conditions and necessities of established financial markets without losing their identity as co-operatives? Moreover, one can ask whether the co-operative structure and newly interpreted co-operative values may be a comparative advantage in competition with private or public banks? The perspective of the book before this background is optimistic. Regarding the case of the United States it outlines that US credit unions are highly professional and business orientated as well as wholly committed to traditional credit union values. As the authors point out, the case studies are not enough for predicting a viability of credit unions in every country.
Other cases, like the transformation of the 'people's banks' in Switzerland into one single joint stock company may be a further ideal-type in addition to their development model. Another important factor for the development of credit unions in Europe is the common currency in the European Union. That might have a strong influence on the future development of the credit unions in Continental Europe, and certainly as well on the future development in the UK. However, these are suggestions for further research in the strategic development of credit unions. In this respect, Ferguson and McKillop present a very useful framework for comparative analysis. Their work, focusing on the strategic development in the UK, is a first impressive test of the usefulness of this ideal-type development model of credit union movement.
- Andreas Eisen
Crecimiento economico con desarrollo social: la experiencia cooperativa
y el rol de sus empresas
COOPERAR-INTERCOOP, Buenos Aires, 1997, pp 389, ISBN: 950-9012-62-9
The publication represents the result of the information and education activities realised by COOPERAR, the Co-operatic Confederation of the Republic of Argentina in 1997.
The book includes two main parts: the first dedicated to the international seminar "Crecimiento economico con desarrollo social, la experiencia cooperativa" organised by Cooperar with the support of the International Co-operative Alliance, in Buenos Aires, June 1997. This part includes the national and international speeches and interventions concerning the four themes of the seminar: reconversion, capitalisation, economic integration and the solidarity and share capital in the co-operatives.
The second part of the book concerns the national seminar "Crecimiento economico con desarrollo social, el rol de la empresa cooperativa" organised by Cooperar in August 1997. This part includes the speeches of numerous leaders of the co-operative organisations of Argentina, analysing the situation and the challenges of the different sectors and enterprises of the co-operative movement of Argentina.
Both parts of the publication constituted an important occasion for a large national and international debate to define new co-operative development strategies and programmes.
- Arsenio Invernizzi
La Allianza Cooperativa Internacional, su Desarollo como Institucion y,
en especial, como Instrumento Transformador de la Sociedad
by Laura Gomez Urquillo, Universidad de Deusto, Facultad de Derecho, 1997, 473pp.
This Ph.D. thesis looks into the historical development of issues related to ICA as an agent of societal changes during the XX century. The thesis offers an interesting analysis of the ICA's role as an universally recognised representative of the co-operative movement. ICA's relationship with its constituency is analysed, in particular changes brought to the membership inthe last years. The ICA membership appears more and more heterogenous and more diverse geographically making it truly universal. This diversity of constituency reflects the structural changes the societies went through and influences the actions directed towards co-operatives. The progressive decentralisation initiated with the creation of specialized bodies and carried on with the regionalisation of decision making structures attests to the vitality of the organisation. The ICA as an actor on the international scene is studied with regard to the relationship it has maintained with international governmental and non-governemental organisations. The collaboration with the United Nations is a particularly rich example of co-operatives influencing national policies through ICA's mediation. The development programme and its main components: education, gender equality and youth promotion are dealth with. The author notes the feeble participation of women in ICA bodies and suggests that action be taken to rectify this situation. Finally, the last chapter stresses the ICA positions taken in favour of international peace and looks into the principle of neutrality.
The conclusions reached are: first by including in its objectives the economic and social progress of mankind as a means to contribute to peace and international security, the ICA trans-cends purely co-operative ideals. By extending its action in favour of development and the environment it influences the changes within civil society. Secondly, the ICA's continous ability to evolve is as important to its success as the cohesion between members and between them and the organisation. Thirdly, by reinforcing its collaboration with other organisation the ICA consolidates its credibility and authority as an international organisation with social and economic ambitions.
- Alina Pawlowska
Co-operative Laws in Asia & the Pacific
by G.K. Sharma, Former Regional Director of ICA ROAP
Published by The Coop Times, India in September 1997, 224 pages
In the preface of the book, the author underlines the importance of co-operative laws as follows:
"No doubt, a good law alone cannot solve the problems of co-operatives in any developing country. However, a properly drafted and positive law can definitely help in creating a conducive atmosphere and helps considerably the growth of co-operatives in a country."
A gem of an idea, this extract comes from the author's 40-year experiences in co-operative movements in Asia including his home country India.
The book, composed of 3 parts, is virtually the summation of co-operative laws in Asian and the Pacific countries.
Part 1 deals with the historical background of Asian co-operatives. In the west, modern co-operative movements evolved in the mid-19th century. Workers, farmers and artisans established co-operatives voluntarily in an attempt to fight poverty and exploitation resulting from the industrial revolution. The modern co-operative movement in Asian countries, however, was mostly initiated by the colonial governments in the late 19th or early 20th century. Colonial governments such as the United Kingdom, the Netherlands and Japan developed Asian colonies as the supply post of raw materials and foods needed for the industrialization of their countries. As a result, farmers were severely exploited and their complaints widely heard. The rulers had to introduce co-operatives in order to appease grumbling farmers even though there were risks that the farmers would learn democratic practices and be enlightened through the co-operative movement. Since the co-operatives were introduced by the governments, the people lost interest and the growth of co-operatives became slow in most countries. It was after the 2nd World War that genuine co-operatives were introduced and developed on the basis of democratic co-operative legislation.
Part 2 consists of an analysis of current co-operative laws in 21 countries in the region. Laws introduced in this part range from the simplest one of Myanmar with 39 articles to the longest one of Australia with 446 articles. Some countries have only federal laws on co-operatives, but other countries have state laws as well as a federal laws. For instance, India has more than 20 state co-operative laws and federal co-operative law. Australia doesn't have a federal co-operative law but it has 6 state co-operative laws, one in each state.
Most of the countries in the region have common laws for all types of co-operatives except Japan and Korea. Both countries have sectorial laws for specific or special co-operatives. For example, there are seven separate comprehensive co-operative laws in Japan for agricultural co-operatives, consumer co-operatives, fisheries co-operatives, credit co-operatives and so on. Co-operative histories and the transition of co-operative laws were introduced country by country, followed by the analysis of the contents and main features of the laws.
Part 3 is entitled 'Present situation and future need'. The author points out that Asian co-operatives are still heavily influenced by the governments which prevent co-operatives from developing rather than promote development. He even cited an example that co-operative societies and the movement in Sri Lanka had been outrageously misused by certain politicians to serve their own ends. In this regard, the ICA Regional Office for Asia and the Pacific has organized several Co-operative Ministers' Conferences since 1990, and made recommendations urging the governments to guarantee the independence of co-operatives.
In addition, the co-operative laws in the region are analysed and synthesized according to the order of definition and objectives of laws, registration, membership, meetings and officers, audit and inspection, funds, government assistance, etc.
In conclusion, this book is really recommended for co-operators who want to grasp the general idea of Asian co-operatives and also take a close look at their legal structures.
- Won-Sik Noh