Voluntary Co-operation (1937)

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

Source : The Present Application of the Rochdale Principles, Studies and Reports, ICA,
London, 1964, 21-23.

                    Voluntary Co-operation

The idea of obligatory membership of a Co-operative Society
never entered into the conception of the Rochdale Pioneers,
neither in planning their society nor in its subsequent
development. The lot of the Weavers was a hard one, and the
conditions of their employment, when work was to be had,
severe. They suffered from low wages, bad housing conditions,
adulteration of food and the system for `truck' which were the
evil emanations of the capitalistic economic system.
Politically, however, they enjoyed a free citizenship a little
in advance of any other country. They were free as air to risk
their savings in an Utopian enterprise and to carry with them
all their comrades and compatriots. The `voluntary' basis of
their society was, therefore, a `sine qua non.' Any other idea
was to them unthinkable.

The voluntary participation of individuals in associated
effort in any country can only be restricted by the State
itself, and not by any provision which it is in the power of
the Association to make for itself, and it is, in fact, only
in countries where limitations and restrictions are imposed by
the State that the `voluntary' character of co-operation or
co-operative membership is destroyed.

There are also certain instances in which societies are
organised to serve the needs of sections of servants or
employees of the State. Membership on the part of those
eligible is obligatory, and the general public is excluded.

The Committee feel, therefore, that they have only to stress
the need for the complete recognition of this Principles as
fundamental to the Co-operative System.

*              *               *                 *

Two other subjects that have been mentioned, neither of which
can be said to be essential to any definition of the Rochdale
System, are `Sale at Current or Market Prices' and `The
Disposal of Collective Assets,' which are dealt with in brief

Sale at Current or Market Price

This question impinges closely upon the Principle of `dividend
on Purchase,' inasmuch as it affects the genuineness of the
surplus and the usefulness of the institution as a price
fixing medium. Perhaps, however, its effect upon the
purchasing power of the consumer is the aspect which appeals
most strongly to the section of the membership which disposes
of the least financial resources.

Research amongst the achieves of Rochdale for guidance upon
this undoubted practice of the Pioneers does not yield much
result. It appears evident, however, from contemporary history
that the first motive which influenced the Rochdale Co-
operators was the all-round convenience of adopting current
prices for their business.

It has been stated by more than one continental interpreter of
the Rochdale System that the practice of the co-operative
movement, first adopted by the Rochdale society, of selling
goods to their members at the prices current in the market or
the sphere of their societies' operations, was a Fundamental
Principle of Rochdale, and they have even given it pride of
place in their list. We cannot find any justification for this
view. It was nothing more than a means for meeting the
immediate necessities of their business, a temporary expedient
which possessed nothing of that `eternal principle of life'
which characterises the true fundamentals of the Rochdale
System. Sale at current prices provided a margin over the cost
of the commodity which would cover the cost of management,
depreciation, interest on capital, etc., without involving
loss to the society as the trading unit. Any downward trend of
prices which left out of account these elementary
responsibilities&of trading would not only be contrary to co-
operative principles but inimical to the financial soundness
of the organisation.

It also blunted the edge of the sharp opposition of private
traders which the new system of co-operation provoked, but
inasmuch as one of the main purposes of the `Store' was to
cheapen the cost of living, selling at market price was a
double measure of protection to the growing association, to be
abandoned for more drastic but equitable price cutting when
the society should reach that stage of stable and efficient
organisation which would enable it to give to its members the
immediate benefit of their association.

There is no reason to think that the Rochdale Pioneers
attached any greater importance to this practice than is
indicated above. Neither is there any ground for thinking that
they regarded the market price as other than an upward limit,
if not an absolute maximum. The practice which obtains in many
societies today of charging high prices to produce high
dividends on the pretext of thrift is opposed.to the spirit of
the Pioneers, and is inimical to the interest of the community
in general beause in results in a general increase in prices
instead of acting, as co-operative trading should do, as a
salutary check upon the exploitation of the consumer.

It is interesting to note that where co-operative production
is highly developed and distribution efficiently organised,
the `current price' of certain commodities tends more and more
to be decided by the policy of the co-operative society, and
to compel the private trader to conform to its standards.

In the view of the Committee, this is the proper function of
Co-operation and, taken in conjunction with what has been said
elsewhere in this Report concerning the usefulness of co-
operative trading as a price fixing standard, they urge that
the Movement in every country should direct its administration
to achieve control of the markets.

The Disposal of Collective Assets
The question of the proper method of the disposal of the
Collective Assets of a Co-operative Society was raised at the
beginning of the enquiry and, by common consent, a question
was added to the original Questionnaire with a view to
ascertaining the practice of the Movement in each country. The
replies received showed that in a considerable number of
countries the Principle of the Indivisibility of Reserve Funds
and Collective Assets was observed and, in several of them,
had the force of law. In others, the provision was contained
in the model rules of the National Organisation, or in those
of the Societies.

In other countries, notably in Great Britan, the fund which
remains over on the liquidation of a society, after all its
obligations have been met, is regarded as the property of the
shareholding members of the society at the time of the
liquidation, or dissolution, and is divided amongst them in
proportion to their shares. The view is held by some members
of the committee that this latter course is contrary to the
Principles of Co-operation, which provide that the surplus
resulting from the operations of the members with the society
shall be divided in proportion to those operations. They
content that shares in a co-operative society have no claim
upon any part of those surpluses beyond the limited amount of
interest that may be accorded by the rules. The Reserves for
the Society are accumulated from various sources, and only in
part from the operations of the members. On the other hand,
that portion of the Collective assets which is derived
directly from genuine co-operative activities results largely
from the operations of the past members of the society on
which the members remaining at the time of the liquidation
have no legitimate claim.

In modification of that view, it is urged by others that the
need for such a provision either in our statement of
Principles, or the rules or practice of the societies, is
unnecessary in those countries where, as in great Britain, Co-
operative Societies are established without definite term to
their existence, and, in fact, only liquidate or dissolve by
reason of their inability to meet their obligations to their
creditors when it is clear no collective assets remain for

The supporters of the Principle of Indivisible Reserves urge
that the practice of most countries, supported as it is by the
law of some, should be regarded as the correct co-operative
practice and be recommended for adoption by all. That practic}
and law provide that the collective assets of a society, after
the settlement of all its just debts, shall be passed over to
some other co-operative organisation, such as the National Co-
operative Union, to be used for purposes of financing new co-
operative enterprises; assisting societies in difficulties; or
to works of social welfare, education or public utility. This
recommendation is, therefore, submitted by the Special
Committee in the hope that it will receive full and favourable