Other Basic Principles of Co-operation not Expressly Included in the Roch.(1937)

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

Source : The present Applications of the Rochdale Principles
of Co-operation, Studies and Reports, ICA, London, 1964, 19-20. 

               Other Basic Principles of Co-operation
          Not expressly included in the Rochdale Rules
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Throughout the course of the enquiry, the Committee have been
faced with the necessity of limiting the main lines of their
Report to those Co-operative Principles expressly set out in
the Rules of the Pioneers. Certain other essential conditions
of the constitution and practice of Co-operative Societies
have inevitably emerged during the discussions, which it is
absolutely necessary to include in this Report as representing
the Co-operative System, some o~ them to no less a degree than
the seven Principles already dealt with which are enshrined in
the Rules and practice of the Rochdale Society.

In this category are the Principles of `Trading Exclusively
with members' and `Voluntary Co-operation,' which are dealt
with in the following sections.

Trading exclusively with Members
(Non-members' Trade)
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Two questions were included in our Questionnaire with a view
to ascertaining in how many countries the practice was
prohibited  by the rules and excluded, in fact, from their
transactions; also to what extent it was practised by those
Organisations which recognised it.

Eight National Organisations in five countries state that
their rules and practice provide for the exclusion of non-
members' trade, while thirty-five organisations in thirty
countries admit the practice to an extent which varies from
0.2 per cent to 83.7 per cent of the annual business of the
societies.

It was argued before the Committee that trade with non-members
constituted no hindrance to the application of Co-operative
Principles if the profits on non-members' trade were allocated
by the rules either to the inalienable reserves of the Society
- even in the case of liquidation - or to disinterested
enterprises, and that in some countries it was practised as a
means of propaganda with a view to hastening the recruiting of
new members.

The Committee are of opinion that the Principle of dealing
exclusively with members cannot depend upon the constitution
of the Rochdale Pioneers' Society but is inherent in the co-
operative idea.

The essence of our system is that it should not make profit,
and its greatest contribution to economic life is that it
furnishes a new basis of commerce and industry-therefore of
society-in which the profit making motive is eliminated. That
result can only be realised completely when the trade of the
society is exclusively with its own members.

The question that immediately presents itself in the presence
of the widespread practice of trading with the public is - How

far is it possible to admit the practice and maintain the
genuine co-operative character of the enterprise? The
Committee think an arbitrary interpretation of the Co-
operative Principle of trading exclusively with members cannot
be sustained, and that the amount of transactions of a society
or movement with other than members in the ordinary
transactions of primary societies of consumers should be
reduced as far as possible. It is suggested that if `Open
Membership' and the simple facilities for entrance adopted by
the Pioneers were universally adopted, there would be little
ground or cause for trade with non-members, have to meet
casual and accidental demands.

There is also a further type of trading which has been
mentioned in the debates, and that is tendering for and
fulfilling contracts of the Municipality and the State. The
Committee have no hesitation in accepting the contention that
in all public contracts for the service of the community, the
co-operative movement should take its part and demonstrate the
superiority of the co-operative economy.

Co-operative Wholesale societies in their operation of
production present a less simplified problem. The necessity
with every productive enterprise of disposing of its by-
products, which may be either altogether unsuitable for, or in
excess of, the needs of the co-operative community in whose
service the production is carried on, is of very long standing
and has passed into the category of things accepted. The sale
of the by-products of an industry in the only markets which
are open to them, whether co-operative or not, is a necessity
of most forms of production. When it comes, however, to the
disposal of the basic products of the enterprise, the question
needs more careful consideration and even definition. Several
forms of this development have been considered by the
Committee.

Another fact that should be faced in this connection is that
non-members' trade is closely connected with the principle of
the `elimination of profit.' In so far as these types of
development succeed, they must detract from the claim that co-
operative enterprise eliminates profit. It is doubtful,
however, whether co-operation has ever eliminated profit but
only the profit-making motive. Still further, it is clear from
the replies to our Questionnaire that in certain countries
where the national organisations quite freely put their
productions in the open market, they also accept the position
that they should be taxed in exactly the same manner as
private traders.