Commercial Development, Free Trade and the Co-operative Movement

    This document has been made available in electronic format
         by the International Co-operative Alliance ICA 
                         June, 1995

               Commercial Development, Free Trade
               and the Co-operative Movement

                    by  Emmy Freundlich*

The Liberal Idea of Economy

The economic organisation of the Middle Ages was the
self-supporting agricultural unit in the rural districts, and
the organisation of trade and crafts, more or less on the
lines of guilds, in the towns.  The development of world
trade, the invention of machinery, the extensive possessions -
not easily realisable - of large traders and money-lenders,
and the financial needs of Governments and rulers constituted
the forces which clamoured more and more insistently for
"freedom in economic development."  It is not without
significance that the idea was born at the beginning of last
century and that its birthplace was Manchester, where the
first technically developed industry was established.  The
place and period stamp the character and importance of this
economic freedom and its aims far better than can be expressed
in words.  Economic freedom meant freedom for the rich, the
moneyed man, who did not wish to be handicapped by laws and
organisations when in search of opportunities to invest his
money in young, capitalist enterprises.  It meant further the
abolition of all medieval restrictions on commerce and trade ;
the worker was to be free to seek work from the employer, the
employer free to engage the worker, with the right to treat
him like merchandise and pay him a wage corresponding to the
laws of supply and demand.  All barriers were to be abolished,
the State was to be nothing more than a watchman protecting
the lives and property of its citizens, defending the State
and the people against foreign enemies, and having the right
to tax the income of its citizens to the extent required. 
Army, Police, and Justice are exclusively domains of the
State, everything else is reserved for the free activity of
the subject.

In a country like England the idea of free trade harmonised
with this system  of universal freedom, with the general
absence of economic regulation, in which everything was
permissible to the strong.  England at that time was the great
industrial workshop of the world, and remained so until the
end of last century.  Whoever wanted to build a factory had to
purchase his machinery from England, and to learn the
management of an industry one had to go to England.  England
enjoyed all the rights and privileges which a country enjoys
that is technically and organically more highly developed than
other countries.  Agricultural production was entirely
abandoned and cultivated land was turned into pasture and
garden.  England was able to do this because in exchange for
her industrial products she had no difficulty in obtaining all
the foodstuffs which she required.  For decades we have seen
the sugar produced in Central Europe being used in England for
feeding pigs whilst the children in Central Europe had to go
without.  With the repeal of the corn laws England was
converted to Free Trade for a century, and for a long time the
establishment of free trade was the aim of all economic
organisations.  As in the mother country, everyone was to have
the opportunity to offer his goods on the world market and to
realise a profit, and in this he was neither to be helped nor

The Co-operative Movement

Co-operation, this new, free and independent system of
economy, brought with it two new economic ideas, because the
lack of economic rights is just as unbearable to the masses of
the people as the lack of political rights.  Whilst the
Chartist or political movement was crumbling, the economic
communities, the trade union and co-operative organisations,
were able to assert themselves and have become permanent
factors in the economic life of the people.  In a country
where the individual enjoyed absolute freedom of activity the
idea of establishing organisations was gaining ground, because
such organisations were not established under pressure of the
government but as a result of the realisation of the need for
the organisation of the labour market and the exchange of
goods.  The trade unions aim at organising the workers,
preventing fluctuations in the market value of their labour by
restricting the exploitation which is so costly to the
community.  Co-operation, on the other hand, by organising
everyday needs, lays the foundation of the organised supply of
the requirements of the masses.  In a world of chaotic freedom
they seek to establish new economic order and utilise the
power of an idea by making it the basis for new economic

What is original and valuable, both in the trade union and
Co-operative Organisations is that they try to unite the
Middle Ages with Liberalism, the freedom of one system with
the unity of the other.  This union is to be brought about
voluntarily, by education and understanding, and the freedom
of organic unity will then link the freedom of the individual
to beneficial work in common.  And for this reason
Co-operative Societies, wherever they exist, are neither free
nor compulsory, they are not blindly the servants of the
Liberal economic idea, but always have their own aims and
special tasks.  These we will now consider in the light of
present day commercial policy.


In 1847 the corn laws were repealed in England and the country
converted to Free Trade.  The German Reich was proclaimed in
1870, and its economic policy led to two important decisions
for Europe and the world, namely, the adoption by all States
of gold in place of the silver standard, and Protection.  But
what was possible in England was not possible in Central
Europe.  Europe could not be transformed into a purely
industrial territory, because the peasants there were far too
numerous and played too important a part in the democratic
structure to be sacrificed.  Germany had adopted general and
equal suffrage.  In England the peasantry was destroyed before
the introduction of universal suffrage, but in Germany it
could not be left to its fate, and attempts were made to
protect the peasants against the growing American competition.

Nearly all European States which cannot transform themselves
into purely industrial States follow the example set by
Germany, so that there are only a few Northern European
states, namely, Belgium, Holland, Denmark, Norway and Sweden,
which adhere to Free Trade.  It would take us too far if we
tried to outline the causes which led these countries to the
adoption of Free Trade.  In a short article we are simply able
to point out the facts.  After the war, and as a result of the
Peace Treaties, the scarcity of goods made itself felt more
and more acutely.  Customs duties were constantly increased,
chiefly because America, the largest supplier and buyer on the
world market, adopted a policy of Protection.  Europe fights
desperately for its existence.  If we speak of Free Trade
to-day we do not and cannot mean the old Liberal idea of Free
Trade.  Even if we wished we could not ruthlessly abolish all
customs duties to-day, because in doing so we should rush into
new and dangerous economic catastrophes.  If the idea of Free
Trade could still be make an object to be striven for it could
only be realised after a long period of development.  By free
exchange of goods we understand to-day not th
 old Liberal idea of Free Trade, but rather that protective
duties should not be increased and attempts made to reduce

But within its own sphere of activity the Co-operative
Movement does not desire any kind of individual free exchange.

It aims at the establishment of an International Co-operative
Wholesale Society, to organise and direct this exchange within
the Co-operative Movement.  If we do not make progress, and
the International C.W.S. is developing only very slowly, it is
not only because of existing economic and commercial
difficulties, but also because of the pronounced individualism
of some of the national Co-operative Movements, which do not
act in the true co-operative spirit.  But this exchange is not
Free Trade and can never be Free Trade, if it is ever to be
established.  It will organise and supply the needs of 56
million co-operators and form the nucleus of the common
organisation of world economy.  These things must be very
clearly understood, and very clearly distinguished, if we wish
to know what the Co-operative Movement may acknowledge as its
aim during the transition period in which we are living.

Trade Monopoly

We must never overlook the fact that there is a State in
Europe, i.e., Russia, which has converted its trade into a
monopoly.  Many enthusiastic Free Traders are great admirers
of Russia.  They do not seem to realise the great influence
which this monopoly is able to exercise on all Free Trade
tendencies.  All States bow down to this monopoly, and even
the most relentless opponents of Bolshevism collaborate with
and submit to the conditions of this monopoly.  World Free
Trade implies for Russia the renunciation of this system, and
capitulation to democracy and the free exchange of goods, in
other words, development on lines diametrically opposed to the
Five Year Plan and the collectivisation of agriculture.  This
must also be taken into account when considering the
commercial policy of Europe.  It is not without reason that
the question whether Russia should take part in the
discussions of the All-European Conference which is to be
convened by the League of Nations is so difficult to decide. 
Some people perhaps believe in this backward policy, but no
one can wait till this question is decided.  Europe must find
the way which it intends to follow, and this way lies in the
direction of substituting unregulated exchange by organised
exchange.  This is the fundamental idea of the United States
of Europe, the guiding idea of the attempts which are being
made to unite all agricultural States for the common sale of
their products and to establish great Inter-State Trading
Companies.  The aim of these companies is to organise the
exchange of goods between the agricultural States of Eastern
Europe and the industrial States of Central Europe by means of
special agreements which will allot a fixed quota to each
State.  The establishment of such Companies is also the basic
idea of the plan of the English Labour Government for the
organisation of trade between the mother country and the
dominions.  The Wheat Pools also, which are intermediate
between Co-operative and State Organisations, are based on
this idea and financed w
th the help of State guarantees.  All these attempts show the
large number of party programmes which exist, how greatly the
idea of trade has changed, and how dangerous it would be if
the Co-operative Movement were only to look back to the
Liberal idea of Free Trade, and ignore the needs of present
day development.  If the International Labour Office and the
Trade Unions are trying to bring about the establishment of
equal wages and conditions of labour in all countries, and
that, after all, is the chief aim of conventions, their
efforts can only be successful if other economic conditions
can be made equal.

There is no doubt that many of these attempts may prove very
dangerous to the interests and the standard of living of the
masses.  One has only to remember the danger that such
international agreements may be controlled by international
cartels or imply the sanction be the State of such
international cartels.  Not all their aims are pure and
honourable or in the interests of the people, and in this
respect it is the principal duty of the Co-operative Movement
to remain loyal to its own principles and to safeguard the
freedom and interests of the peoples.  

The Co-operative Movement, which represents such a valuable
union of compulsion and freedom, can do more in shaping the
future economic system of the world if it understands the real
position to-day and tries to extend its economic and political
power so that it may itself become the basis of organised
trade.  If we succeed in making the Agricultural and
Consumers' Co-operative Societies the basis of the trade
monopolies of the States we shall have done more to assure our
own future than if we re-affirm old ideas, which have never
been, and never could have been, the ideas of the Co-operative

We must consider critically all experiments which are made
throughout the world, never trust in words and always ask how
things would look in practice, so that we may not be misused
for alien, especially not for nationalist, purposes, but
realise that the future belongs to organised economy and the
time of unrestricted freedom for all kinds of economic
activity is past.  Unless we wish to return to the compulsory
organisations of the Middle Ages, Co-operation must try to
carry out in the new economic organisation the idea by which
it is animated, and to which alone it owes its internal
strength` Freedom.  Freedom, certainly, but only in the
service of the greater community.  Higher than all national
economic interests are those of world economy.  

To re-model this, to redeem it from depression and poverty is
the task which co-operators must undertake, even if it leads
them to new paths.

* Ms Freundlich, President of the International Co-operative
Women's Guild, wrote this article for the Review of
International Co-operation, No. 3, March 1931.