CHAPTER X COÖPERATION Coöperation differs from profit sharing primarily by reason of the fact that, in its industrial form, at least, its aim is to modify radically, and finally to utterly abolish, the wage system. Moreover, coöperation is essentially democratic, while profit sharing is essentially paternalistic. The latter is an effort on the part of the capitalist class to increase net profits by means of a bonus to labor more or less contingent upon increased industry and care, while the former is an effort on the part of the working class to abolish profits by distributing surplus funds among those whose labor or trade has created the surplus. Profit sharing aims to increase the total production of wealth, and coöperation aims to promote its more equitable distribution. Many enthusiastic coöperators, in fact, while deprecating political socialism in many of its phases, accept the socialist state, or coöperative commonwealth, as their ultimate ideal. The principle of coöperation demands, first, the distribution, not of a part, but of the whole, of the profits. Secondly, it involves a radical change from centralized, aristocratic control to diffused, democratic control of industry or trade. Its aim is, by means of union, to distribute throughout all classes both wealth and power. This study, however, is concerned merely with workingmen's coöperation. The farmers' buying and selling organizations, coöperative creameries, grain elevators, fruit agencies, telephone companies, etc., are, from the point of view of the laboring man, merely successful business organizations of the joint-stock or "trust" type, and are quite as far removed from working class coöperation as if they were owned and operated by a single man. Cooperative credit, on the other hand, though more often used by the middle class, is sometimes of advantage to wage laborers, while consumers' coöperation primarily, and producers' coöperation essentially, are working class measures. 1. Methods of Coöperation: The word coöperation is applied technically to unions for economic advantage "whether in the purchase and distribution of commodities for consumption, or in the production of commodities, or in the borrowing and lending of capital among workmen. There are, then, three different forms of cooperation: (a) that which is carried on by associations of persons who desire to benefit themselves as consumers by saving the merchant's profits, commonly called distributive or, more properly, consumers' coöperation; (b) that which is carried on by associations of persons who desire 2 to benefit themselves as producers by eliminating the employer's profits, commonly called productive or pro 1 Encyclopedia Britannica, Vol. VI, p. 338. ducers' coöperation; and (c) that which is carried on by associations of persons who desire to benefit themselves by the use of their combined capital and their combined credit. Each form of coöperation presents separate features, advantages, and problems. (a) Consumers' Coöperation: Distributive coöperation consists essentially in "a union of many consumers for the purpose of securing in the purchase of commodities advantages impossible to be obtained by one, through an equitable division of the profits derived from their purchases." This variety of coöperation is exemplified by, and has been most thoroughly and consistently developed in the great system of coöperative retail and wholesale stores which is now said to reach about one-seventh of the population of Great Britain. The two essential features of consumers' coöperation are, (a) democratic management and (b) some system of dividing profits in proportion to purchases. Usually the store is controlled by the shareholders on the principle of one man one vote," regardless of the number of shares he may hold, and this principle is considered essential to true coöperation. In some cases each member is allowed to hold one share, and in other cases each member is allowed to hold as many as 200 shares, but the price of a share is usually, in the latter case, very low, in England, £1. The shares themselves seldom entitle the holders to anything more than a fixed rate of interest, which is treated as one of the expenses of the business. 1 Seventeenth Annual Report of the (Massachusetts) Bureau of Statistics of Labor, p. 54. (1). Methods of Dividing Profits: In the division of profits two principal methods have been employed. Profits may be divided simply among shareholders in proportion to their purchases, or they may be divided among both shareholders and non-shareholders, the latter receiv ing a smaller proportion, usually one-half, the dividend 2 on purchases allotted to the former. The first of these two methods is that which is followed, for instance, by the stores which have been recently started in the Central States under the plan of the Right Relationship League of Chicago, while the second is the Rochdale, or English, method. Sometimes a full dividend is given to non-members and only one-half is paid in cash, the other half being credited toward the purchase of a share of stock. In general it is considered good business policy to allow nonmembers to share, though in a lesser degree, than members, in the benefits of the society. In all cases where the profit is divided only among the holders of stock, the number of shares to be held by each individual must be strictly limited, and the shares must be widely distributed, if not practically unlimited in number. Otherwise the concern is merely a joint-stock company or close corporation, and the shares rise and fall in value with the success or failure of the company. a truly coöperative company shares remain always at par, and new members merely add to the prosperity of the business and consequently to the dividends of the other shareholders. Members are usually encouraged to leave their dividends undrawn, and these are used in the exten In 1 sion of the business. Thus the store serves also as a savings bank, and habits of thrift are formed. (2). Prices: Under the Rochdale plan of coöperation the current prices of the town are accepted as a fair standard, though it is insisted that all goods shall be pure and of good quality. With every purchase the customer is given a ticket marked with the amount of the sale. These tickets are presented at the end of the fiscal period, and each purchaser receives his proportion of the dividends, according to the amount of his trade. Some coöperative establishments sell at the lowest possible prices consistent with safety. There is, however, serious danger under this plan that unforeseen expenses or losses will sweep away the profits and even the capital of the business. This plan also necessitates selling only to members, while if non-members are allowed to make purchases, particularly if they are allowed to share in dividends, the store is effectively advertised, for each one experiences for himself its benefits. Moreover, the system which sells at current prices has three great advantages. In the first place it encourages thrift by lumping savings instead of dissipating them over small purchases. Secondly, it renders it difficult to conceal bad administration, Thirdly, it does not rouse, by pretending to undersell all other stores, the opposition and keen competition of the regular traders, which is sometimes disastrous to new enterprises. It has not infrequently happened that the other stores have sold certain articles below cost to attract trade and, by advertising ޑ 3 |