However, the story of co-operation is not as blissful and untroubled as it might appear so far. Conflict loomed large at every turn. Looking first at external relations, there was conflict between the Co-op and the private sector20. The success of the co-operative retailers caused resentment among their competitors. This sometimes spilled over into direct action.
There are recorded instances where an employee of a private sector firm was sacked when it became known that they had a family member who worked for the Co-op. In the 1930’s The Grocer magazine, organ of British small shopkeepers, succeeded in getting a BBC radio programme on the co-operative movement banned. They argued that the dominance of the Co-op was strangling high street trade and its principles of equality and mutuality were viewed as tantamount to Bolshevism.
The worst instances of discrimination occurred during the First World War as private traders sought to exploit food shortages whereas Co-ops kept prices as low as possible and took steps to distribute scarce goods fairly. Government controls were placed on the supply of goods but these were often detrimental to the Co-op. Private enterprise was more politically influential and saw to it that their interests were favoured. The same political influence also resulted in discrimination against those associated with the Co-op when it came to exemption from conscription. It was felt that it would be no bad thing if a Co-operative competitor was forced to shut down, with the upshot that male co-operators became more likely to be classed as available to be conscripted.
Although the founders of co-operation had deliberately sought to avoid politicisation, this now became necessary in order to fight injustices against members of the movement, and to put their alternative point of view across.
This pressure to engage in the political arena led to the foundation of the Co-operative Party, which existed as a party in its own right from 1917–1927. It is now allied with the Labour Party and, in 2004, has 30 MPs.
This engagement in party politics stood the Co-op in good stead when, after the Second World War, there was a move to nationalise retailing. The Co-operative MPs were able to help defeat this move which would have severely threatened their business. However, in the eyes of the voters, the Co-operative party was never able to put across its message simply enough for it to be clearly perceived, so, in the macro-political arena, it was unable to survive alone. 21
There were other, less negative outcomes arising out of opposition to the Co-op. Innovation flourished in response to the attempts of the private sector to undermine the success of the Co-ops. Boycotts by private sector manufacturers meant that the Co-op had to design and produce even more of their own goods, often naming them so as to reflect this situation (thus explaining the use of ‘Defiant’ to name a radio). In some cases the retailing itself was also innovative with the introduction of self-service, mobile shops, and even the first supermarket.
Over the decades the political climate at the national level had changed considerably since the first days of the Co-op when working people were among the disenfranchised groups. Universal suffrage gave everyone a democratic opportunity not only to vote but also to be elected to Parliament. This opportunity for participation in the wider political arena weakened the distinctiveness of co-operation as an opportunity for citizenship.
The social and business context in which the Co-op operated had also changed dramatically, making the Co-op message that it was ‘different’ from other forms of organisation increasingly difficult to substantiate. The welfare aspects of co-operation had been taken over by the state during the 1940’s and 50’s. Education was an important aspect of co-operation but young people could now go off to state universities rather than the Co-operative College. The Welfare State also provided health care and protection from unemployment for all and weakened this facet of the work of both co-operatives and friendly societies. In addition, unionisation had brought Marxist and socialist ideas into the workplace, and given individuals another route to mutuality and representation through union membership.
In the eyes of the public, social changes and the Welfare State had undermined the power and saliency of the co-operative way of doing things, although the principles of co-operation were still firmly in place22. During the 1950’s public commitment to the Co-op had flagged to such an extent that an Independent Co-operative Commission, headed by Hugh Gaitskell MP, was instituted to review the situation and make recommendations for a brighter future. Reporting in 1958, the Commission found that there were 967 co-operative societies in existence but that many of these were small and weak. If the whole concept of co-operative retailing was to be strengthened the Commission advised that, through mergers and amalgamations, the number of societies should be reduced to 300 and then organised into powerful regional groups.23
Unfortunately, the Gaitskell Report went largely unheeded, so much so that a second Independent Co-operative Commission was recently established and reported in 2001.24 Although the individual societies involved had agreed with the 1958 report’s analysis and, in principle, with its recommendations, most were not able to acknowledge that any of this applied to them. The social goals of co-operation had lost their clarity and force and, behind the doors of the Co-op, the principle of democracy was proving difficult to put into practice. The democratic tradition within co-operatives necessarily creates the opportunity for individuals to air their views, making it inevitable that conflict will be generated within the movement. Different viewpoints compete with each other, as evidenced by the continuing debate in the Co-operative press concerning the extent to which co-operatives can federate and remain true to their values and principles. More specifically, during the 1960’s the introduction of advertising was delayed by a groundswell of opinion represented by influential CWS Board members who did not believe that such activity was either necessary or moral.
So, when it comes to co-operative decision-making, the outcome may owe more to interest group allegiances and alliances than to open-minded co-operation in the process of considering the relevant arguments and evidence. At an individual level, the exercise of power in and of itself sometimes distorts the outcome of co-operative decision- making. A controversial instance of this was David Hughes’ proposal to fellow board members of his particular Co-operative Society that they should abolish the cash dividend.25 The repeal of the Retail Price Maintenance Act in 1964 meant the end of price control. The supermarkets, which had begun to compete seriously with the Co-ops, could now reduce their prices and pass their economies of scale on to the consumer. The Co-ops, however, still had to fund the dividend, typically at the rate of one shilling in the pound (in other words, 5%), as well as supporting their welfare activities – all out of the mark-up on their goods. This meant that they struggled to compete on price with the newly established supermarket chains, and lost business rapidly. At the start of the 1960’s there had been 863 retail Co-ops but by the end of the decade only 150 were left trading, the fall in numbers being due more to mergers between Co-ops than to complete collapses. Hughes argued that the dividend was proving to be just too expensive, despite being a powerful traditional symbol of co-operation, so it had to go. Despite being threatened with expulsion from the board, David Hughes stuck to his guns and his local society did indeed abolish the dividend.
Meanwhile, other societies found less absolute ways of dealing with the same problem, such as introducing Dividend Stamps, restricting the dividend to non-food items and, more recently, Loyalty Cards.
Many observers, both inside and outside of the co-operative movement, felt that weak management and nepotism had undermined the Co-op’s ability to adapt to the new circumstances facing it. Although education and gender equality were core principles of co-operation, neither graduates nor women had been recruited to manage the Co-op. Recruitment was largely through association, with promotion by seniority and into ‘dead men’s shoes’. A vacuum in talent and business acumen had been created over the decades of success which was to contribute to the Co-op coming to the edge of a crisis.
The 1960’s and 70’s saw a significant change in the relationship between business and society which dramatically altered the context of co-operation. The state took on increased social responsibility with the result that there was no longer any requirement for business to involve itself in social issues if it did not want to. This, along with less restrictive regulation of business, e.g. the abolition of retail price maintenance mentioned above, cleared the way for those who were so inclined to devote themselves single-mindedly to finding new ways of furthering shareholder interests. Marketing and advertising burgeoned and the era of consumerism dawned. The law had curbed the worst excesses of capitalist exploitation but new forms of competitive advantage were soon created in the arena of courting consumers. The new technology of the communications media, especially television, opened up fresh avenues for influencing potential customers and branding became a crucial tool in the marketeers’ armoury. It was consumerism and not, as commonly held, the supermarket chains that were the nemesis of the Co-op. Slow to respond and stuck in their old, but not necessarily co-operative ways, the Co-operative Societies failed to respond to competition and faced a crisis of transformation – they simply could not go on as they were and needed to change dramatically.26 “The problem was not that the Co-op had not done the analysis – the problem was that they did not act on it.”27 Co-operative members were no longer primarily engaged in the struggle to moderate capitalism and the pursuit of social principles, they were now also consumers who were all too easily seduced by more slick presentation and persuasive advertising, not to mention keener prices, than could be found at the Co-op.
20 Joshua Banfield (2001) contributing to The Co-op, BBC Radio 4, presented by Chris Bowlby
21 Ray Donnelly (2001) contributing to The Co-op, BBC Radio 4, presented by Chris Bowlby
22 Ostergaard, GN & Halsey, AH (1965) Power in Co-operatives: A Study of the Internal Politics of British Retail Societies Oxford:Basil Blackwell.
23 Spear, Roger (2000) Membership Strategy for Co-operative Advantage, Journal of Co-operative Studies Vol 33:2 (No 99) pp. 102-123.
24 The Co-operative Advantage was published and made available on www.co-opcommission.org.uk in February 2001.
25 David Hughes (2001) contributing to The Co-op, BBC Radio 4, presented by Chris Bowlby
26 Mintzberg et al (1998) Strategy Safari: A guided tour through the wilds of strategic management Hemel Hempstead: Prentice Hall Europe Chapter12.
27 Private communication from Bill Shannon, Head of Corporate Affairs, the Co-operative Group dated 8th October 2002.
