The 7 Principles of Cooperatives: Origin and European Relevance

The cooperative movement represents one of the most enduring and successful models of democratic economic organisation, with particular significance in Europe's built environment. The seven principles that guide cooperatives worldwide stem from a rich history of collective action and continue to shape how housing and other cooperatives operate today.

Historical Origins

The foundations of modern cooperative principles can be traced back to the Rochdale Society of Equitable Pioneers, established in 1844 in Rochdale, England. This pioneering group of weavers and craftsmen formed one of the first successful consumer cooperatives during the Industrial Revolution, a time when mechanisation threatened workers' livelihoods and social movements sought to address growing inequality.

While the Rochdale Society is often credited with establishing the framework for modern cooperatives, cooperative activities existed earlier. In the 18th century, Greece saw cooperative organisations develop under Ottoman sovereignty, particularly associated with agricultural and craft products. The Common Company (Syntrofia) of Ambelakia (1780-1812) in Thessaly is a notable example, involving 22 villages and 6,000 members who produced high-quality red cotton yarns for European markets.

In Britain, the first documented consumer cooperative was founded in 1769 by the Fenwick Weavers' Society in East Ayrshire, Scotland. By 1830, several hundred cooperatives existed across Europe, though many failed by 1840. The financial cooperative model emerged in Germany in the mid-19th century, with Franz Hermann Schulze-Delitzsch establishing urban credit unions in 1852, followed by Friedrich Wilhelm Raiffeisen's rural model in 1864.

The Rochdale Principles were officially adopted by the International Cooperative Alliance (ICA) in 1937 as the "Rochdale Principles of Co-operation." They were subsequently updated in 1966 and again in 1995 as part of the Statement on the Co-operative Identity, which continues to guide cooperatives globally.

The Seven Cooperative Principles

The seven principles that define cooperatives today are:

1. Voluntary and Open Membership

Cooperatives are voluntary organisations open to all persons able to use their services and willing to accept the responsibilities of membership, without discrimination based on gender, social status, race, political affiliation, or religious belief. This principle ensures that cooperatives remain accessible to anyone who can benefit from and contribute to their mission.

2. Democratic Member Control

Cooperatives operate under democratic governance where members actively participate in setting policies and making decisions. Each member has equal voting rights (one member, one vote), regardless of their financial contribution. Elected representatives are accountable to the membership, ensuring that power remains distributed rather than concentrated.

3. Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of this capital becomes the common property of the cooperative. Members typically receive limited compensation, if any, on capital subscribed as a condition of membership. Surpluses may be allocated to developing the cooperative, benefiting members proportionate to their transactions, or supporting other activities approved by the membership.

4. Autonomy and Independence

Cooperatives are autonomous, self-help organisations controlled by their members. If they enter agreements with other organisations or raise capital from external sources, they do so on terms that preserve democratic member control and maintain cooperative autonomy. This principle safeguards cooperatives from being controlled by external entities.

5. Education, Training and Information

Cooperatives provide education and training for members, elected representatives, managers, and employees to contribute effectively to cooperative development. They also inform the general public-particularly young people and opinion leaders-about the nature and benefits of cooperation, fostering greater understanding and support for the cooperative model.

6. Cooperation among Cooperatives

Cooperatives strengthen the cooperative movement by working together through local, national, regional, and international structures. This principle encourages cooperatives to collaborate rather than compete, creating networks that enhance their collective impact and resilience.

7. Concern for Community

While focusing on member needs, cooperatives work for the sustainable development of their communities through policies approved by their members. This principle acknowledges that cooperatives exist within broader social contexts and have responsibilities beyond their immediate membership.

Relevance in Modern Europe's Built Environment

In the European built environment, particularly housing, cooperative principles have proven remarkably relevant and effective. Housing cooperatives represent a middle path between renting and owning, offering affordability, security, and community benefits.

Housing Cooperatives in Europe

Germany provides an excellent example of successful implementation of cooperative housing. The German housing association encompasses 2,000 cooperatives managing 1.9 million flats, while the Housing Cooperatives Germany alliance brings together over 400 companies with more than 800,000 flats. These cooperatives operate on the principle that members pay a moderate fee for using flats that, as cooperative property, belong collectively to all shareholders, including the residents themselves.

This model of joint ownership makes housing more affordable while serving the interests of residents rather than external investors. Key advantages include:

• Security of tenure: Cooperative flats cannot be sold on the open market, providing members with lifelong rights of residence.
• Continuous investment: Without pressure to serve external shareholders, cooperatives can invest continuously in maintaining and improving their buildings.
• Adaptability: Housing can be adapted to changing needs, such as those of families or older residents.
• Social cohesion: Many cooperatives provide common spaces, guest accommodations, and leisure activities, fostering community connections and reducing isolation.

Some German housing cooperatives even operate their own savings institutions, where members can invest their savings at competitive interest rates, providing working capital for building modernisation and maintenance.

Contemporary Significance

The cooperative principles remain highly relevant in addressing contemporary challenges across Europe:

• Housing affordability crisis: As housing costs rise in many European cities, cooperatives offer a non-speculative model that prioritises affordability over profit.
• Democratic participation: In an era of growing democratic deficits, cooperatives provide practical experience of democratic decision-making and collective governance.
• Sustainability: The "concern for community" principle increasingly encompasses environmental sustainability, with many housing cooperatives leading in green building practices and energy efficiency.
• Social inclusion: The open membership principle helps create diverse communities that can counteract trends toward segregation and exclusion.
• Economic resilience: Cooperatives have often demonstrated greater resilience during economic downturns compared to conventional businesses, providing stability in uncertain times.

The cooperative model continues to evolve while remaining true to its foundational principles. Its emphasis on democracy, equity, and community aligns well with European values and provides practical solutions to contemporary challenges in housing and the broader built environment.

References

1. NCBA CLUSA - 7 Cooperative Principles - Values of a Co-op (https://ncbaclusa.coop/resources/7-cooperative-principles/)
2. University of Wisconsin Center for Cooperatives - Cooperative Principles (https://uwcc.wisc.edu/about-co-ops/cooperative-principles/)
3. Polyas - History of Cooperatives: What are their beginnings? (https://www.polyas.de/blog/en/electoral-research/cooperatives-history)
4. Malta Co-operative Federation - The seven cooperative principles (https://maltacooperativefederation.coop/coops/seven-cooperative-principles/)
5. Wohnungsbaugenossenschaften - How Housing Cooperatives work (https://www.wohnungsbaugenossenschaften.de/genossenschaften/how-cooperatives-work)
6. Wikipedia - History of the cooperative movement (https://en.wikipedia.org/wiki/History_of_the_cooperative_movement)
7. International Co-operative Alliance - Guidance Notes to the Co-operative Principles (https://ica.coop/sites/default/files/basic-page-attachments/guidance-notes-en-221700169.pdf)
8. Wikipedia - Rochdale Principles (https://en.wikipedia.org/wiki/Rochdale_Principles)
9. Common Equity Housing Limited - Seven Cooperative Principles (https://cehl.com.au/seven-cooperative-principles/)
10. Co-operatives UK - Co-op values and principles (https://www.uk.coop/understanding-co-ops/what-co-op/co-op-values-and-principles)