Letters to the Editor

LETTERS TO THE EDITOR

Dear Mary Treacy,

I have just returned from abroad to find also a copy of the most recent
Review in which I came across your very interesting article among others on
'Co-operative Image - Improving Information and Communications'. I was
surprised that you made no mention of this very important article in your
editorial - modesty perhaps!

May I congratulate you for an enormous leap into the future and for
choosing GreenNet and the APC. I was very excited and encouraged by your
article and the information shared as I have been working in the past few
months, starting on my intuition, to set up a co-operative network of
support for help-givers, 'Rainbow Network' which is still in its
development phase but will be accessible via GreenNet, Antenna and Toolnet
in the Netherlands. It is evolving as a co-operative in the Care Sector and
will eventually be registered as such, providing bulletin board, email,
data base and online conferencing and possibly counselling services, but
administered and developed by participating members from the bottom up as a
(virtual electronic) social support co-operative. (See enclosed background
info.)

I was very interested in the results of Working Group II and wish you every
success. I can detect from your article that you are also very excited by
your progress and perhaps as I have been, sometimes frustrated with the
(temporary!) glitches. Hope you are documenting them and will pass them on
to members.

My email address is at rainbownet@gn.apc.org or daryl.barker@tool.nl

My very best wishes at this important and critical time for the global and
local Co-operative movement and the Co-operative Commonwealth of
Communities........

Daryl Barker

P.S. You asked me in your letter a year ago to share my experiences with
co-operative development in East Africa after having served in South Sudan
and Kenya. I was not ready to do so then as it was too soon
afterwards........ but I am sending you copies of background documents for
your information and possible reaction to my initiative for 'Psychosocial
assistance to refugees from South Sudan in Kenya' sponsored then by Novib
and Stichting Vluchteling of the Netherlands. It stemmed from a mission I
did for the World Food Programme four years ago (see enclosed cutting from
The Guardian).

A major component of my initiative was concentrated on the socio-ecological
aspects of co-operative community development with influential and very
capable marginalised urban refugees (mainly women) from South Sudan in
Kenya and the Ministry of Co-operative Development for one of the most
valuable training sessions I have ever been privileged to facilitate.

Lamentably, in spite of my efforts afterwards in contacting organisations
for a possible follow-up, such as Co-operative Centre Denmark, Co-operative
College UK, CRS UK, UK Co-operative Council, Oxfam, Plunkett Foundation,
Co-operative Research Unit, Open University UK, Rabofoundation NL, the
response has been most disappointing i.e. negligible. The promised support
to the Sudanese group from the Co-operative College of Kenya unfortunately
has never materialised either in spite of assurances at the time from the
Principal and senior trainers who participated in the seminar I helped to
organise there in May last year (see enclosed documents).

Recently, one of the key participants in the pilot phase has successfully
completed his advanced diploma course at the Co-operative College in Moshi
but his prospects and those of most of the refugee community in Kenya are
getting worse than ever.

He has recently been in touch with the ICA regional office in Tanzania
apparently hoping to complete another post graduate course at the
Co-operative College of Tanzania. It is surely a unique opportunity which
the ICA could be concentrating on, by getting information to and
stimulating/supporting pre-co-operatives in all sectors actual co-operative
building with individuals, who may eventually be closely involved in
rebuilding their communities and cultures, hopefully co-operatively!

What I am saying is that ICA 'empire building' should not stop with new
hierarchies of bureaucratic elites which begin and end at office desks,
either in Geneva or Moshi etc. but should penetrating in a genuine and non
patronizing, truly co-operative way in among the people such as the group I
have been privileged to work with and giving them full support and
assistance, instead of concentrating seemingly endless cycles of costly
conferences, paper chains of academic reports on values and reports on
reports of values etc. etc., while the dissemination/access of stimulating
and interesting basic practical information by new and appropriate methods
such as multimedia and distance learning is being manifestly neglected.

Neurotic preoccupations with The Co-operative Image can easily become just
a masquerade to hide the reality of so many millions on our planet in
abject and virtually hopeless poverty, misery and insecurity, whilst we
fool about with new gadgets and toys, which is what they will remain if
they do not serve and really help the less fortunate than ourselves........
can this message ever break into the endless institutional committees and
verbiage produced and effect real change and co-operative development
instead of development co-operation ........isn't this the real and actual
alternative ICA should be promoting and existing for in this coming
centennial year?

As recommended, in Annex I of my enclosed report on the pilot phase that
multimedia equipment using basic computers and distance learning techniques
is of vital and urgent importance for stimulating and communicating
practical and theoretical information about Co-operation and, especially in
such situations as I have described in my reports ........ I wonder if you
would agree? Have you ever seen the libraries and correspondence courses
offered by many colleges - how run down they have become and how
uninteresting and even dated they are for various reasons .How can
traumatised insecure humans such as refugees and the underprivileged in
countries such as Kenya, Uganda etc. begin to appreciate and take in such
ideas from such sources ........it needs to be represented in a much more
interesting and stimulating way, perhaps non-literal and more visual -
certainly NON-academic, with possibilities of actually forming
pre-co-operatives with access to co-operative revolving credit via
Co-operative banks and social security/health insurance schemes etc. where
none exist.

Who cares about such refugees and exiled communities? The refugee
organisations, yes, that's their business and that of many others jumping
on this escalating bandwagon - but it is a unique interface for the ICA to
be there where it really matters, not only among the successful and
prosperous co-operative organisations and olive-groves of Academe ........
acting to stimulate and encourage the person-to-person,
community-to-community, movement-to-movement, non-governmental assistance
that is really needed in these situations, where the obsolete UN system is
failing.

What more can I do as an individual?

Does the ICA care or are you too busy building hierarchies of privilege and
a new elitist bureaucratic empire and detaching yourselves in comfortable
offices and rituals from such reality?

I sincerely hope you do care and might be able to support and help directly
or indirectly such groups, which I have found, in my many years of
experience in least developed countries to be unique and deserving, not of
top-down patronage nor charity but real and generous co-operative help to
help themselves!

So you asked me in your letter of November 5 1993 to share such an
experience - now what?

........please don't turn it into another polite article beloved by liberal
academics and humanitarian do-gooders, because the reality is of failure
and neglect, not success, as most of the review articles seem to describe.

Perhaps we should be learning from such failures and sharing the
responsibility and opportunity, nay obligation, the co-operative mission
demands of us with respect to mutual aid and generous assistance for
helping others to help themselves co-operatively.

Incidentally, Graham Melmoth may perhaps remember my somewhat passionate
intervention at the UN Co-operative Council Forum a year ago on behalf of
such groups and the obligation of the Co-operative Movements and the goal
of its being in the Co-operative Commonwealth. I was glad to meet him on
that occasion but unfortunately was only able to speak briefly with him.

If the future of co-operation is not to be found here among such groups as
the Sudanese group I and others have been working with, then really just
what is the point of its great and noble past???

What have we to celebrate in this coming centennial year if there is not to
be an outpouring and sharing of Co-operative Charity in the very real sense
instead of what might be an exercise in smug indulgent self-congratulation
at preserving our illusions and privileges?!?

----------------------------------------------------------------------


Mr j.m. Jno Baptiste
Mr Ibrahim Jalil
Mr M. S. Matanyaire
Mr Donat Mubalya
Mr Noah Simelane
Mr Peter Yeo
International Co-operative Management Centre, Loughborough, U.K.

Dear Sirs,

Let me start my long answer by telling you how delighted I was to read the
Letter from Loughborough to the Editor of the Review of International
Co-operation in the Volume 87 No 3 1994. Thank you.

Of course, your reactions to what I have published in R.I.C. Vol. 84, No 1
1991 will be welcomed as well.

Two months ago, during a day of reflections about the co-operative
principles, organised by the Ministry of Finance and Plan of Senegal, in
Dakar, exploiting the occasion of my visit to Dakar for a short mission of
ILO, and with the participation of 28 representatives of different NGOs,
national and international, I have received the same reactions as yours in
the first half of the day. The second half of the day was completely
different. The participants understood, and with the understanding came the
shock, as someone has just revealed that the King is naked, and that what
they have believed, and what you still do, should be put under a big
question mark.

The first and foremost question to be asked is to whom the co-operative
belongs. I believe it belongs to its members, and not to any, whatsoever,
abstract entities, which you called `indivisible reserve', and which I
believe have no place in a real co-operative.

Please take it off from your co-operative legislation, and you can do it. I
am asking you to replace a dogmatism (your words, and you are right) with
the free will of choice of the member, towards his own co-op.

Does the co-operative belong to its members? If part of the equity of the
co-op belongs to everybody it means that it does not belong to the
individual member, and that means that part of the co-operative belongs to
no one. Which part? One quarter, or one half, or three quarters, of the
capital of the co-operative. To whom then does it belong?

The consumers co-op in Israel, The Blue Square, has according to their
declarations, 20,000 members. The value of one share in this so-called
co-op, which is, by the way, a very good business, is of 500 Shekels (about
US$ 175). The total amount of members share in the property of this co-op
is 10,000,000 Shekels. Practically, this is the value of the fixed assets
of one of their branches, and they have more than one hundred.

Members share in the fixed assets of what is supposed to be their co-op is,
in fact, less than 1% of the total value of the fixed assets of that
co-operative. This is by the way the situation in many consumers
co-operatives in many Western countries. (Maybe you can easily check what
the situation is in England. You will be surprised). It is not finished.
This co-operative has 4,000 employees. They bought 10% of the equity of
that co-op. The employees of the co-operative own 10 times more than the
members. It is a very strange situation thanks to the unacceptable ideas of
collective ownership, and of investment of surpluses in the development of
the co-operative. If members possess only a small part in the property of
the co-operative, to whom then does the rest belong? Logically, at least to
me, it is an impossible situation.

I was born in a moshav in Israel. (You may say I am a co-operator from
birth. I myself am a second generation in my moshav, and there are families
where the forth generation is taking the lead. No one will dare to think
that something which you have accumulated during years or generations does
not belong to you. The moshav is maybe one of the only real socialisms in
our world.

When you are speaking about difficulties for poor people to pay an
expensive share capital, you prefer to forget my division or classification
of co-operatives. I divide co-ops into two groups. The one is where members
are users, as in co-ops like consumer co-ops, saving and credit co-ops,
insurance co-ops and housing co-ops. All of them have no limit in number of
members, have no employment to members in these co-operatives, and the
value of the share is relatively low. The second group is where members are
not users, such as producers' co-ops, service co-ops, transport co-ops, and
construction co-ops. In these co-ops there is a limit in number of members,
the members are employed by the co-ops, and the share value is rather high.

I can't agree with your statement that most co-operatives reject my ideas
(p. 6). Most co-operatives in the world follow ICA Principles blindly, as
many of co-operative leaders do, without thinking of the disastrous results
on the relationship between co-operatives and their members, the feelings
of  alienation of members towards their co-operative: the co-op does not
belong to us, we don't care of what is going on........

One of the most successful co-operatives is Israel is EGGED public
transport co-op, which of its kind is one of the biggest in the world, and
with more than 5,000 members. They are applying Zvi Galor's `strange'
ideas, and maintaining the value of members' share, according to my
formula: Total of the fixed assets of the co-op, divided by the number of
members in the co-op. They have all the time old members going to
retirement, and having their share value in real terms in hand. They have
all the time new young members joining the co-op, who pay most of their
share by credit taken by the co-op on their behalf, because they are young
and poor. The outcome of this policy is that we have a successful co-op,
which exists already more than 60 years, and which has members who own
their co-operative, who care for what is going on it, and in short
successful one.

Permit me to quote from you: `In our generation we are entitled to use the
assets but not to appropriate them'.

Why: Why are we not allowed to appropriate something we have paid for
entirely? It is our own property. The empty threats that you are waving
about turning our co-ops into capitalist enterprises, can't ever happen in
my proposed way, but  it does happen in your way, and look around and see
most of the co-operatives in the Western world, which are no longer
co-operatives, and which do not belong to their members.

You are trying to turn the co-operative into a prison? The majority of
members have eventually decided that they no longer want their
co-operative. Who are you, and who am I, to tell them what to do with their
own property?

I entirely agree with some of the new proposals of Prof. MacPherson. But
where, in this text, are the logical consequences of the explanation - the
members' ownership of their co-ops?

In the list of the proposed principles, the principle about Financial
Structure, he says `........Co-ops may pay interest on their
capital;........' and later on, in a document distributed for eventual
remarks, he says: Co-operatives may pay a competitive rate of interest on
capital........'

In both cases there is a fundamental issue to be responded: Why are members
rewarded for their participation?

If it is for financial participation, as it is proposed and to which I am
completely against, what then is the difference between a co-op and a
capitalist enterprise?

For me the difference lies in the way the financial results of the
enterprise are divided.

In capitalist enterprises, results are distributed among units of
investment, of capital.

In the co-operative enterprise results are distributed among members,
according to units of participation of each one of them.

My view is that a co-operative does not reward capital except in one case:
when members have not yet completely paid their share capital. Only then
the co-operative is proposing a competitive rate of interest, because it is
looking for the cheapest source of credit to complement the investment in
the fixed assets of the co-operative. These are the benefiting members who
are charged for that credit, and pay the interest. This payment goes to the
members who  gave that money, since they have been motivated by the
competitive proposed rate of interest.

There is another aspect for Prof. MacPherson's mistaken proposal. If the
co-operative pays interest on shares of members, be it limited or
competitive, we have to respond to the question from where these funds
would come. We remember that, at least by their nature, the shares are of
equal value for all members. Now, I know that most answers, probably
including yours, would say that the money to pay the interest would come
from the surplus or as a part of the operational expenses of the
co-operative. If it is so, and this is in fact the practice in so many
countries around the world, we are creating a situation where a member who
participates ten times more than another member in the business of the
co-op, during a given year, participates ten times more in a payment
targeted to the interest on shares, that by its nature, should have been
divided equally.

The same story goes for education. Why a member who is participating more
in the services provided by the co-operative, will pay more for education,
that by nature supposed to be equally provided to all members. All members
should finance education equally.

The same goes for reserve funds. What is a reserve fund, and to what
purpose it is created? There are some who would say that the reserve fund
is to cover losses in the business of the co-op. During previous years,
this was one of the common mistakes in the former Eastern Bloc, and it is
incrusted in their co-operative legislation. If we accept this, it means
that a member who makes business this year pays for the participation of
another member made during a previous year. Why should this be so?

If the reserve fund is to serve as a security belt for the fixed assets of
the co-operative, if there should be a need, and that is to me the only
justification for doing so, the reserve fund should be financed by all
members equally. The practice today, and the one you are proposing, is that
the reserve fund is financed out of the surplus, and that means a non equal
contribution by the members, to what they had to participate on an equal
basis.

By the way, the reserve funds money is kept generally in deposit accounts
in banks. The rate of interest paid by banks in most countries, at least in
the Third World, is negative and is below the rate of inflation in those
given countries, and that means that co-operatives' money is eroded and
evaporated, and members are not even aware of it.

The co-operative, when investing part of the surpluses, is creating
injustice among its members. A member who has participated more in the
business of the co-operative, and by doing so, has created more surplus, is
going to finance more, according to your proposal, of the fixed assets of
the co-operative, when investing part of the surplus, than another member,
who participated less in the activities of the co-op in this given year.
More than that, and for example: In a given co-op, a loan was contracted by
the co-op, to be invested in the fixed assets. The loan is to be
reimbursed, principal and interest, over 5 years. The repayment of the loan
is paid, as this is the practice in most countries worldwide, by payments
from the turnover of the co-op.

Prof. MacPherson is participating five times more than me in the business
of that co-op. That means as well that he participates in the reimbursement
of the loan five times more than me. In fact, equitably, we had to
participate  equally in these payments. Five years have gone, and the loan
has been completely repaid. Now, I am increasing my participation, for
various reasons, in the co-operative activities, benefiting from investment
which was largely paid by you. If the co-operative is to be dissolved,
whatever share that I will get, partly was paid by you. I do not want such
a co-operative.

For me:
The co-operative is to serve its members in the best possible way, and at
the lowest possible price.

Co-operatives should not strive for the creation of surplus, but rather the
best possible service.

There are no dividends (this term does not belong to the co-operative
world) in a co-operative. There are no rewards to the participation of
members to the creation of their co-operative fixed assets capital.

The only rewards in the co-operative are going to participation of members
in the activities of the co-op. And are expressed, in the reduction to
maximum the price of that participation.

I really don't understand your argument about donations. Usually these
gifts are not for the community, but as an assistance to the finances of
the fixed assets of the co-operative. Please, do not tell me these stories.
Donations to communities are going to all the members of the community.
Donations for co-operatives are going to the co-operative and are financing
the fixed assets of that co-op. What is wrong with this? The current
members can't divide the spoils, since it is invested in the fixed assets
of the co-op.

`Let many flowers bloom'. I am a farmer, and I know that a flower which
received the best possible treatment, would be the nicest.

With my best wishes!

Zvi Galor
Senior tutor-lecturer
Head of division
Africa, Asia and the Pacific
International institute - Histadrut, ISRAEL
P.O. Box 18296
61181 ISRAEL
Fax: 972 3 6059484