Under the plan of cooperative management the attempt is sometimes made to do away with the profits of the enterprisers or rather to secure those profits for the workers by dividing the enterpriser function up among a group of workmen. A number of types of such cooperation are to be found, among which may be enumerated cooperation in wholesale or retail trade, credit cooperation, and "productive" cooperation. Of these the most successful has been cooperation in retail trade.

The typical example of such success is the Rochdale Society of Equitable Pioneers, originally an organization of flannel weavers of Rochdale, England. This society, which was founded in 1844, consisted in the beginning of twenty-eight members with a total capital of twenty-eight pounds. The Rochdale Pioneers undertook at first to supply themselves with flour, butter, sugar, and oatmeal. As the society prospered and its membership grew, the range of its activities expanded rapidly. During the earlier years of the enterprise its promoters served without pay, but later salaried managers were employed. The management of the Rochdale Pioneers was democratic, each shareholder having only one vote, irrespective of the number of shares that he held. Sales were for cash, and the enterprise thus avoided the bad accounts that competing stores sustained. After all the expenses of the society were paid, a 5 per cent dividend on the capital stock was alloted to shareholders. There was then set aside a further sum for educational purposes, and the remainder was divided among the purchasers whether members or not in proportion to their purchases. The Rochdale society has also undertaken the management of mills and factories as well as the original work of selling to consumers. These mills and factories are, however, run by salaried managers and the workers in them have no voice in the management. They are not cooperatively conducted by their workers. Cooperation in both retail and wholesale trade has developed to a marked degree in Great Britain as well as in a number of continental cities. In this country, too, there are many examples of cooperation in the retail trade, but they have not been so successful as in Europe, partly because of the keener competition of competing concerns and partly because the American workingman has not in the past cared for the small economies practiced by the families of European workingmen.

In Europe, cooperative credit associations also have made marked progress. Among the most important of these are the Schulze-Delitzsch and the Raiffeisen societies of Germany. The first type of these was founded by Schulze in 1849 among thirteen cabinetmakers of Delitzsch, his native town. In the Schulze-Delitzsch association loans were granted to members of the society paying regular monthly contributions. Money for this purpose was borrowed from outside as well as contributed by the members themselves. For the money borrowed from outsiders all of the members of the society became liable. Each member became liable individually. The members of the society were thus able to borrow money because of the strength of their cooperative security at a cheaper rate than they could have secured it individually, or perhaps where they could not have secured it at all from the banks. In the Raiffeisen societies the members are for the most part peasant proprietors. They contribute part of the capital and a part is borrowed, as in the Schulze-Delitzsch societies. Because the money is for agricultural purposes the loans are for longer periods than is the case in the urban societies. Similar cooperative credit associations are to be found in the other countries of Europe as well as in the United States, where the building and loan associations furnish a successful example.

In the two types of cooperation already noted, where we have cooperation of consumers or cooperation of borrowers, the function of the enterpriser is less important than it is in the case where there is cooperation of producers, or productive cooperation. Consequently this latter type of cooperation has been less successful. In cooperative production the workers either advance the capital or secure it on their own credit and divide among themselves the task of managing the business. Productive cooperation has nowhere had the same degree of success as has been accorded the plan of cooperation of consumers and of borrowers. The possibilities of its success are greatest where there are only a few workers employed in the group and where these workers do not represent a great variety of skill and strength, where the outlay for capital is relatively small, and where it is a comparatively easy matter to market the product successfully.

89. Advantages And Disadvantages Of Cooperation

A business which is run cooperatively and successfully should enjoy the advantage of running without fear of strikes, since the workers themselves are the enterprisers. A second advantage which the cooperative business enjoys arises from the fact that the satisfied laborers take a lively interest in their work, and there results a greater efficiency in production. But cooperative associations, and especially productive cooperative societies, labor under important disadvantages which have prevented them from achieving a wide success. Where singleness of purpose and promptness of action are required, cooperative production often can supply only divided counsels and dilatory action. Where unique, and, therefore, high-priced expert guidance is required, the cooperators find it difficult to appreciate the importance of that guidance and hence fail to pay sufficiently high rewards to secure it. Moreover, the laborers are not always willing or able to stand the chances of sustaining losses as well as of securing profits, and prefer the certainty of a stipulated wage rather than the uncertainty of receiving profits or bearing losses. This leaves room for an enterpriser distinct from the laborers who is willing to take the chances of the business and to guarantee the workers a certain if moderate income.