PRINCIPLES OF CO-OPERATION

PRINCIPLES OF CO­-OPERATION

The term "principle", derived from the Latin word "Principium" meaning "basis", has different meanings : the primary idea, a certain thesis, a rule of an organisation.

“ALL FOR ONE AND ONE FOR ALL"

“SELF HELP AND MUTUAL HELP"

The principles of co-operation may be considered as the broad guidelines for co-operative societies in the conduct of various activities.

Prof. D. G. Karve, Co-operative principle as the "Way of organizing and conducting co-operative activities." The working definition adopted by the International Co-operative Alliance Commission was: "those practices which are essential, ie, absolutely indispensable to the achievement of the Co-operative Movement's purpose".

Co-operative principles are those principles which are essential to the achievement of the Co-operative Movement. In the words of George Davidonic, "They are Set of Rules which govern the life and activity of Co-operative Organization.

 

There were different stages in which the principles were developed.

           The important stages were:

I. Roach Dale Principles as in the First Stage

             Il. International Co-operative Alliance (ICA) principle in the Second Stage

   Ill. Karve Committee on Co-operative principle as in the Third Stage and;

             IV. Co-operative Principles by ICA in 1995 as Final Stage.

Let us discuss the each stage in detail:

I. ROACH DATE PRINCIPLES

The first Co-operative Society came into being in 1760. This was set up by Wool Wick and Chaton. There were various Co-operative societies formed on different lines in between 1760 and 1844 periods. Unfortunately they did not succeed. In 1844 Twenty Eight Flannel Weaves in a place called Roach Dale in England formed a Consumer Co-operative Society for benefiting the weaver’s community. They succeeded in their venture basically on account of the fact that they were running the store with some basic principles. This society is working in England as a Wholesale Equitable Pioneers Co-operative Society.

The principles give by them for the first time and include the following:

a) Open Membership

b) Democratic Control

c) Limited Interest on Share Capital

d) Patronage Dividend (Distributed Justice) e) Cash Trading

f) Political and Religious Neutrality

g) Promotion of Education (Education of Members); and

                h) Selling Pure and Unadulterated Goods.

a) Open Membership

         Memberships of co-operative society is open to all those who belongs to the area who need their service.

b) Democratic Control

Management of the co-operative society is being done democratically though democratic principle and the elected body controls the day to day affairs.

c) Limited Interest on Share Capital

Interest on capital provided was only limited

d) Patronage Dividend

Dividend distribution is on an equitable manner. Nobody gets special privilege on account of high capital contribution.

e) Cash Trading

         They decided to sell goods only on cash and no credit was allowed.

J) Political and Religious Neutrality

          They gave equal importance to all religion and politics

g) Promotion of Education

Education is important for its development so they extenteded co-operative education to all.

h) Selling pure and unadulterated goods

 

 

ROACHDATE PIONEERS

The principles of co-operation can be raised to Roach Dale Pioneers who established their Equitable Society in 1884, though their origin goes back to Robert Owen (father of Co­operation) and Dr. Willing King of Britain and some of Utopian Socialists.

The first persons to formulate definite practical rules and successfully demonstrate the gainful possibilities of co­operative actions were the Roach Dale Pioneers.

They are called Pioneers of Co-operative Movement because of the following:

1. They were responsible for organising the first permanently successful co-operative store.

2. They succeeded in giving a definite shape to the co­-operative movement.

3. The individual, involved there in were outstanding personalities; and

4. They were the persons who could organize a co­-operative wholesale society which holds a prominent place in Britain even now.

II. INTERNATIONAL CO-OPERATIVE ALLIANCE (ICA) PRINCIPLES

International Co-operative Alliance (ICA) is an international body set up for the promotion of co-operative ideas and spreading the principles of co-operation around the world. From 1844 to 1934, enormous changes took place in the world on Economic, Social and Political fronts. So a fresh look at co-operative principles was called for. The International Co-operative Alliance (ICA), therefore, appointed a Sub Committee in 1934. They evaluated the principles enunciated by Roach Dale, its relevance and observance in the present time and finally submitted its report in 1937. Based on the Sub-committee Report the ICA instead of formulating principles, they simply classified the Roach Dale Principles in to two - Essential and Non Essential in 1937.

They are:

1. Open Membership

2. Democratic Control                                                                  Essential Principles

3. Limited Interest on Share Capital

4. Patronage Dividend

                (Distributive Justice)

5. Religious and Political

Neutrality                                                                      Non essential principles

6. Cash Trading

7. Promotion of Education

(Education of Members)

       8. Selling Pure and Unadulterated Goods.

III. KARVE COMMITTEE ON CO­. OPERATIVE PRINCIPLES

Again in 1960 due to the dynamic nature of the world, a modification in the Principles of Co-operation, as stated by ICA in 1937, was essential. Hence, the ICA appointed a Commission in 1964. Five Nations namely UK, USA, USSR, Germany and India represented the Commission. Prof. D.G. Karve from India was the Chairman of the Commission and, therefore, the Commission is popularly known as Karve Commission on Co-operative Principles.

The Commission evaluated the present principles and submitted its Report in. 1966 by recommending the following principles:

 

1. Open and Voluntary Membership

Membership of a Co-operative society is open to all those who wish to join it. So also there is no discrimination on the ground of caste, creed, religion, race, sex or politics. The point to be remembered while giving membership is that a co­operative society cannot admit members whose interest or profession is antagonistic to that of a co-operative society. For example, a money lender is not admitted as a member of primary co-operative credit-society.

2. Democratic Management

The management of a co-operative society is being done democratically. The ultimate responsibility of entire managerial powers is vested with the General Body.

The main points to be included in democracy are:

a) Each member has only one vote

b) Majority rule in all matters.

c) Committee of management always have the authority of members before they take any important step.

According to the principle of democratic control the Board of Management is an elected body, who controls the day to day affairs.

3. Limited Interest on Share Capital

As per the Co-operative Societies Act, 1969, Interest on capital is restricted. For the purpose of collecting necessary amount of funds, the societies bound to pay interest. Whatever interest paid should be on a limited scale.

4. Equitable Distribution of Surplus

Earning of profits is not the basic objective of a co­operative society. But this does not imply that co-operatives are run on no profit no loss basis or they are managed with losses.

The surplus of the society is disposed of as follows: 1. Provision is made for the development of the society 2. Provision is made for Common Services;

3, some of the surplus is distributed among the members on equitable basis.

5. Co-operative Education

The progress of the society depends to a great extent on how best its members can take an active part in its affairs, which is possible only when the members are educated.

         Co-operative education includes:

 A) Education of the members

 B) Education of office bearers; and

 C) Education of prospective members.

6. Co-operation among Co-operatives

In order to best serve the interest of members all co­operative organizations should actively co-operative in every practical way with other co-operatives at Local, National and International levels. Such type of co-operation is necessary to acquire greater strength to face adverse conditions. (Source: Sarada, Principles of Co-operation)

To quote the Commission, "If the co-operative movement is to rise to its full stature... the several co-operative institutions must unreservedly support one another. They must act as members of a common united effort to realise the objectives and ideals of the movement as a whole... The ideals of...a co-operative commonwealth        can hardly be realized in practice except by the unstinted and united efforts of all co-operators and co-operative institutions, large and small, national and international.

 

IV.CO-OPERATIVE PRINCIPLES BY ICA IN 1995

A serious discussing was made on the erosion in values of Co-operation in ICA Tokyo Congress held in 1992. Therefore, Tokyo Congress recommended ICA to initiate steps to review the current ICA Co-operative Principles in 1966 and make possible changes to prevent the erosion in values of co­operation. Based on such a recommendation I the Executive Committee of ICA direct Dr. Ivan Mac Pherson (Canada) to review the Co-operation Principles in 1994. He submitted the Report in 1994 and the same is approved by ICA General Assembly in Manchester in September 1995. This Report contains Seven Principles.

They are:

1. Voluntary and Open Membership

2. Democratic Member Control

3  Member Economic Participation

4. Autonomy and Independence

5. Education, Training and Information

6. Co-operation among Co-operatives; and

7. Concern for Community.

They confine the First Five Principle which is Essential for Internal Dynamic of any typical Co-operative and the last Four are needed for Internal and External Relationship of Co­operatives

1. The Voluntary and Open Membership

Co-operatives are voluntary organization where in people choosing voluntarily' to make a commitment to their Co' operatives. So they must be allowed to participate freely. Co' operatives are made open to all persons able to use their services and willing to accept the responsibilities of membership without considering Gender, Social, Racial, political or even Religious factors.

The capacity to bring diverse people together for common goals is one of the great promises, the Co-operative Movement offers to the 21st century.

2. Democratic Member Control

Co-operatives are democratic organization controlled by their members, who activity participate in setting their policies and making decisions. The members have the right to be actively involved in setting policies and in making key decisions. In co-operatives men and women serving as elected representatives are accountable to members. The members and the users are one and the same person in co-operative organizations. So democratic control in a co-operative means control by member-users. This is much deeper than the so­ called democracy of a joint stock company.

3. Member Economic Participation

Members contribute equitably to the capital of their co­operatives. Co-operatives operate with capital us servant and not the master of the organizations. Members get dividend based on the member participation as Economic benefit.

4. Autonomy and Independence

Co-operatives are autonomous, self help organization controlled by their members. They make arrangements to and Contracts with other organization even with the Government as a result of autonomy and independence.

5. Education, Training and Information

         Co-operative Movement has a commitment to education. Co-operatives provides education and training for their members, elected representatives, managers, and employees so that they can contribute effectively to the development of their co-operative societies. The information relating to the nature and benefits of co-operatives are supplied to general public particularly young people and opinion leaders for further development and growth of this sector.

6. Co-operation among co-operatives

Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through Local, National, Regional and International structures.

7. Concern for Community

The co-operative societies are formed the benefit of their members. Co-operatives have a special responsibility to ensure that the development of their communities is sustained Economically, Socially and Culturally.

To conclude, that the above said principles are the important qualities that make co-operative institutions effective, distinct and valuable. The basic role of Government in this regard is to provide a conducive environment for co­operatives in which they may combine in their working Co­operative values, Socio, Economic objects and competitive strength in the Globalised Era.

1. Define co-operative Principles.

2. Explain briefly the principles of Co-operation.

3. Explain the principles of Co-operation by Committee.

 

4. Explain the principles of Roach Dale

 

5. Explain the Re-formulated principles by ICA.

 

6. Why Roach Dale people are called pioneers of co-operative Movement?

7. What is a Co-operative Society?

8. Explain briefly the principles of Co-operation formulated by ICA in 1995.