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Cooperatives and Democracy in Scandinavia:
past, present and future
By Victor Pestoff*
Paper presented at the 2011 ICA Global Research Conference,
Mikkeli, Finland, 24 – 27 August, 2011.
*Professor Emeritus in political science & Guest Professor at the Institute for Civil Society Studies, Ersta
Skondal University College, Stockholm, Sweden, e-mail: victor.pestoff@esh.se.
Cooperatives and Democracy in Scandinavia: past, present and future
A. Introduction: political science perspectives 2
1. The traditional “school of democracy” argument 3
2. Shifting post-war perspectives in political science 4
3. Scandinavian studies of voluntary associations 5
B. Types and drivers of social change 8
1. Societal change 8
2. Political change 9
C. A dynamic model of cooperative development 12
1. The logic of competition or amalgamations and concentration 14
2. The logic of membership or disappearing democratic structures? 16
3. The logic of influence or cooperatives and policy-making? 17
D. Co-op Norden – a mega amalgamation in the 21st Century 19
1, The first 100 years of the Swedish consumer cooperative movement 19
2. A mega amalgamation in the 21st Century – Co-op Norden 21
E. Co-production and economic democracy: a roadmap for the future? 22
1. Co-production and welfare service co-ops: 22
2. Multi-stakeholder co-ops 24
3. Creating trust in the provision of welfare services 25
F. Conclusions and discussion: Making Membership Meaningful 26
References 27
Figure 1 13
Table 1 30
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Cooperatives and Democracy in Scandinavia: past, present and future
By Victor Pestoff
Abstract: Cooperatives are hybrid organizations that have multiple goals and values. They must
balance the demands of several important social stakeholders, their members and staff, the
market and the political system. This paper argues that they made a significant contribution to
democracy in the past and can do so again in the future. It begins by discussing the traditional
political science view on the role of associations as a school of democracy and the need to
revise this view in light of major social changes. Then it explores briefly some major social and
political changes that have impacted on the space for civil society and cooperatives in
Scandinavia and elsewhere. It presents a dynamic model of cooperative development. It goes on
to compare the impact of the amalgamation of the three established cooperative movements in
Sweden – retail, agriculture and housing – during the formative years after W.W. II. Then it
highlights the potential of cooperatives to renew themselves through intelligent design. Here
economic democracy, multi-stakeholders and co-production become important tools and
concepts. It maintains that democracy and the market could and should be more closely related.
This would permit cooperatives to provide innovative solutions to social problems outside the
traditional cooperative fields, in the form of cooperative social services.
Cooperatives play a significant role in Scandinavian societies. As hybrid organizations
with multiple goals they attract the attention of various academic disciplines. However,
given differences between disciplines economists ask different questions than political
scientists, even when studying similar subject matter, like associations and cooperatives.
Economists often pose questions related to theoretical models or ask why certain
organizations exist. So, they may analyze the transaction costs of cooperatives and
private firms. Political scientists, by contrast, try to understand certain organizations by
exploring what they do and how they do it. For example, they do not ask why political
parties or pressure groups exist, but rather study what they do and how they do it. Often
they compare and contrast similar organizations in different contexts or countries. Thus,
the political science interest in cooperatives is not so much a question of why they exist,
but rather what and how they can contribute to society. More specifically, how can they
facilitate the smooth functioning of democracy? This chapter considers cooperatives and
democracy in Scandinavia, taking the Swedish case as an illustration.
A. Introduction: political science perspectives
This section introduces several different political science perspectives on voluntary
associations and cooperatives.
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1. The traditional “school of democracy” argument
Voluntary associations, including cooperatives and other non-governmental
organizations, have traditionally been attributed an important place in democratic theory
as organizations that were independent of the state and they, therefore, became a
cornerstone in early liberal writings. De Tocqueville (1830 & 1945) provides a
fascinating explanation of American democracy in terms of an unlimited reservoir of
civil engagement by ordinary citizens. Voluntary associations provided the key to
understanding the development of democracy in the New World. They were considered,
among other things, a school for learning democratic rules, thinking and behavior.
It should, nevertheless, be kept in mind that the era of agrarian society, composed of
rural villages and small towns, observed by de Tocqueville at the beginning of the 1800s
in America, has long since passed into history. Previously, society was based mostly on
self-sufficient farmers that catered to their own needs and had little formal education.
They lived on isolated farms, and perhaps only congregated in villages or towns on
Sundays and holidays. Joining together in voluntary organizations to promote their
common interests didn’t infringe on their way of life, although it perhaps sometimes
made it easier for them to pursue their own family interests.
Industrialization and urbanization were seen as the prime drivers of early societal
change. In brief, the transition from rural, agrarian societies to post-industrial
cosmopolitan societies has been dramatic in recent generations. Today post-modern
Western societies are composed mostly of urban and suburban dwellers, many who live
in multiple story and multiple family housing. Many are highly educated, hold jobs in
highly advanced industries or services, and they are also highly interdependent
economically, socially and in other ways. They may travel greater distances by car or
mass transportation, to and from work every day, than their ancestors normally did in a
year or more. They take for granted things like hot and cold running water, showers,
toilets, and some even an automatic lawn sprinkler system, rather than having to dig
their own wells. They also have electricity, a refrigerator and freezer, a stove, radio, TV,
microwave, dishwashers, washing machines, etc. Given the informatics revolution, they
come home to read their personal e-mail or chat on the internet, and perhaps watch a
DVD or download music or a film from the net, rather than ‘spin yarns’ or exchange
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local ‘news’ during their visit to town or to their church, as their ancestors did a few
generations ago.
Not only has life and many of its artifacts changed dramatically during the past
century and a half, but society and its social institutions have also changed radically
since the time of de Tocqueville. Today, civic virtues are more likely to result from
social bonds established through school, work, residence and even compulsory military
service, than from membership in voluntary organizations or participating in local town
meetings. This is so, quite simply, since today’s citizens are much more involved in and
spend much more time in the former type of social institutions than the latter (Newton,
1997; Newton, 1999). Moreover, today’s citizens are to a greater or lesser degree
dependent on the state and the services it produces for them, including education,
highways and freeways, collective traffic, airports, railroads, water, sewage and trash
collection, health care, electricity, etc.
2. Shifting post-war perspectives in political science
The threads of these seminal 19th century writing about the importance of voluntary
organizations can be clearly seen in the early works of the post-war pluralists like
Truman (1951 & 1971), Kornhauser (1960), Dahl (1961), Lipset (1963), Coser (1956),
Huntington (1968), and Almond & Verba (1963) who attributed great importance to the
democratic functions of voluntary organizations in modern societies. Voluntary
organizations were seen by pluralists as a buffer between the rulers and ruled that
prevented direct access of either group to/by the other; something not found in the
totalitarian societies of Eastern Europe, ruled by a single party. They were sometimes
referred to as the ‘glue that held society together’, in spite of considerable economic,
political and social cleavages in most pluralist polities. However, little empirical
research existed on either side of the Atlantic to support such contentions. Thus,
voluntary associations played an important role in early pluralism and at times the list of
their virtues seemed unending. They provided pluralism with a more coherent,
competition-based and market-like alternative to the political philosophies of socialism
or communism. However, decades later, after the end of the Cold War and the Fall of
the Berlin Wall, we may again face the need to revise democratic theory and ideas about
the role or functions of voluntary associations.
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According to functional-structural theory in the 1960s and 1970s voluntary
associations were supposed to articulate the needs and demands of citizens, while
political parties were supposed to aggregate them. However, when reality deviates too
far from theory it is necessary to change one or the other. Non-governmental
organizations in many European countries pursued their political aims by other means,
independent of the electoral channel of representation. Stein Rokkan (1966) suggested
the existence of a corporate channel of influence in Scandinavia, and maintained that
“[v]otes count in the choice of a government, but other resources decide which policies
it will pursue” (ibid.).
Later, Schmitter (1974) and his colleagues pursued the study of neo-corporatism by
focusing on business interest organizations in seven OECD countries during the 1970s
and 1980s (Streeck & Schmitter, 1985; Streeck, et al., 2005). More recently Putnam
argued that civil society and social capital were positively related to both economic
development and political effectiveness in his study of the growth of new regional
democratic institutions in Italy and his comparison of northern and southern Italy
(1993). In later works he laments the loss of civic virtues and social capital in the USA
(2000). His writings have undeniably contributed to reviving a more general interest in
the role of voluntary organizations in democratic societies. However, while perspectives
on the relationship between the third sector and state may shift between various authors
and approaches, there appears to be little awareness of fundamental changes in society
that posit rethinking this relationship in democratic theory.
3. Scandinavia studies of voluntary associations – cooperatives as the “middle way”?
Strong parallels to the ideas of de Tocqueville can be found in the work of some
scholars in Scandinavia who attributed similar functions to voluntary associations as did
de Tocqueville. Ambjörnsson (1988 & 1995) notes the importance of unions, free
churches and the temperance movement in mill-towns in Sweden in the late 1800s and
early 1900s for the development of the labor movement and democracy. They taught the
working class in many mill-towns the basic skills of self-respect and self-discipline,
how to read and write and how to organize union and lodge meetings and the
importance of following democratic rules and regulations in their own decision-making.
Several persons who graduated from this school of democracy later became prominent
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in local and even national politics after Sweden adopted universal suffrage in 1919/21
(ibid.).
However, concerning the ideas of the early pluralists on multiple memberships and
cross-pressures promoting social and political stability, as already noted, little empirical
research existed before the late 1970s on either side of the Atlantic to support such
contentions. When it finally came it did so in the form of a comparative study of the
Nordic democracies that showed voluntary organizations functioned quite differently in
multi-party systems than in Anglo-Saxon two party democracies (Pestoff, 1977). This
research showed that “party integrative associations”, like trade unions, agricultural co-
ops and even some religious and temperance organizations, reinforced their members’
loyalties and integrated them into the political sub-culture of a specific political
movement, while nevertheless contributing to political and social stability (ibid.). This
also exposed the weakness of claims for universality by many early pluralists, since they
ignored the local and national embeddedness of voluntary associations in Europe and
Scandinavia.
Other authors highlight the role played by cooperatives during the turbulent decades
before, during and after WW II. Childs’ influential book, Sweden: The Middle Way
(1936 & 1961), was set in the tumultuous years of the 1930s, against a backdrop of
massive economic, political and social unrest in most of Europe. This was illustrated by
the Soviet Revolution, the aftermath of the Great Depression throughout Europe, the
rise of Nazism in Germany and Fascism in Italy, the Iberian Peninsula and elsewhere.
Sweden and its Nordic neighbors appeared as an idyllic isolated region of social
tranquility and everyday pragmatism, combined with economic and social progress.
Childs attributed a major role to the Swedish cooperative movements in achieving this,
in particular the consumer cooperatives, the agrarian cooperatives and the building and
tenant cooperatives. They provided a pragmatic commercial alternative to the rampages
of laissez-faire capitalism in the USA and to communism in the Soviet Union. However,
nearly 50 years later he noted dramatic changes in many walks of Swedish society
(Childs, 1980). Once again he called attention to the importance of the Swedish
consumer cooperatives, but now only in terms of promoting international development
aid to third world cooperatives. Moreover, he expressed growing doubts about their
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contribution to domestic social and political compromise which seemed to vanish in the
intervening years (ibid.).
The role played by cooperatives in Scandinavia today is marginal compared to their
historic and, often heroic, roles prior to W.W. II. For example, at the beginning of the
20th century, the consumer co-ops played an important role in breaking the hold of local
factory owners on the sale of daily goods in company shops, and even in breaking the
production monopoly on basic staples, like margarine. However, growing urbanization,
industrialization, economic integration and competition have diminished the importance
of such goods for the well-being of ordinary citizens. Moreover, through a process of
extensive amalgamations starting in the 1960s, the consumer co-ops grew into large
bureaucratic organizations, well beyond the reach of ordinary members (Pestoff, 1991).
The consumer cooperatives became even more commercially oriented in the 1990s and
their economic, political and social role changed beyond recognition by the start of the
new millennium.
Other popular movements associated with the Social Democrats in earlier periods,
like the housing co-ops continue to play important economic and social roles for the
well-being of their members, but their role also became overshadowed by the growing
welfare state and large scale social changes. The two major building and tenant co-ops,
HSB & Riksbyggen, established in 1924 respectively in the early 1930s, played an
important social role by building low-priced, good quality housing for working class
inhabitants (Pestoff 1991). They contributed to resolving problems brought on by the
major demographic changes and urbanization of Sweden and to the renewal of major
urban areas in the 1960s & 1970s. They are democratically run by their members and
have continued to expand and to provide high standard housing, but not always as low-
priced as many young persons would like today. HSB not only supports a general tax-
based welfare state; but, it has become engaged in the field of home care for the elderly
in recent years. It also expressed concern about the future of the welfare state, due to
increasing marketization of public services, and the threat this poses to cooperative
alternatives (DN, 1/9-01).
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B. Types and drivers of social change
There are different types of social change. Wijkström and Zimmer (2011) propose a
simple model of social change based on three components: (a) a set of drivers, (b) social
processes in which these drivers facilitate change, and (c) the effects of these changes.
They also identify three levels of social change that have an impact on civil society.
They are comprised of: (i) changes that affect the space available for civil society
relative to other types of organizations in society, (ii) changes in the balance between
various forms of organizations as well as different types of operations within civil
society, and (iii) changes with the frame of reference used for carrying out the day to
day activities inside the organizations and the mental frames used to understand
organizational work (ibid.).
It is impossible to discuss social change without considering the chicken-egg problem
of which came first. Industrialization and urbanization belong to the usual explanations
of social change, but they are often seen both as the cause and effect in a continuous,
iterative process. These macro-level processes can both initiate change and be a
manifestation of it. Moreover, they often serve as shorthand for even more sweeping
social changes that remain below the surface. The latter includes, but is not limited to,
several societal changes in recent decades and centuries. Note, however, that while they
may appear as separate items in the list below, many of them overlap and can reinforce
each other to a greater or lesser degree. We will begin with some more general
developments or societal change and then turn to the regional or national developments
or political change.
1. Societal change
First, we can note the gradual change from a society made up primarily of self-sufficient
farmers, living in isolated agrarian societies that had little contact with or use for money
to urban workers who became wage-earners in factories for 10 – 12 hours per day
(Perrow, 2002). This eventually opened up for a new type of organization, namely trade
unions to promote better working conditions and wages. Second, we find the gradual
change from basically agricultural to industrial economies and then to service
economies, particularly in terms of wage-employment in most modern societies. Today,
two-thirds of the employees in most OECD countries work in the service sector. This
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should clearly impact the nature and development of the trade union movement. The
Scandinavian countries have the highest rates of unionization in the world, including
high degrees of unionization of white-collar workers and civil servants (Visser, 2006).
Third, along with these developments, we also find the almost unabated growth in the
GDP and standard of living of most citizens in most modern societies, together with the
continual growth of inequality in many of them and all the social problems that follow
in the wake of increasing inequality (Wilkinson & Pickett, 2009). However, inequalities
and the grave social problems resulting from them are smallest in the Scandinavian
welfare states and Japan, according to Wilkinson & Pickett (ibid.). This should
reasonably impact the growth of organizations necessary to deal with the negative
effects of inequality; i.e., both public and nonprofit organizations necessary to resolve
social problems.
Fourth, to a varying degree, we can note the rapid growth of the welfare state after the
end of WW II, along with an accompanying bureaucracy to provide public services
(Esping-Andersen, 1990). Today citizens have become highly dependent on the goods
and services provided by the public sector in most post-modern societies. Fifth, there is
the growing globalization of the world economy and international trade (Hirst, &
Thompson, 1996). However, several smaller European countries have traditionally been
strongly involved in international trade, including the Scandinavian countries, so this is
clearly not a new development for them (Katzenstein, 1986). Moreover, highly
organized societies are uniquely prepared to meet the challenges of globalization
(Olsen, 1990). Sixth, is the development of ‘organized society’, with its mega
organizations on both sides of the public/private divide, that tend to overshadow many
smaller civil society organizations and individual citizens (Hirst, 1994).
2. Political change
In addition, there are several regional and/or national developments worth mentioning.
First, is the growth and development of new economic, political and social structures at
the European level, through the processes of European integration. It started with six
countries forming the Common Market, more than a decade after the end of WW II.
They became twelve when several EFTA countries joined them, then fifteen and now
the 28 member countries of the European Union (EU). This had a major impact on most
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economic, political and social developments, often in the name of standardization or
harmonization of trade in the EU.
Second, as a manifestation of Hirst’s observations (1994) about the growth of big
organizations on both sides of the public/private divide, we can note a “big is beautiful”
trend. It started with two waves of amalgamation of Swedish municipalities, first in the
1950s and then again in the 1970s. This resulted in a dramatic reduction in the number
of municipalities and towns, from 2,500 at the end of W.W. II to merely 290 by the mid-
1970s. It was motivated by the government’s desire to create a sufficiently large
economic, political and social base for the developing welfare state; but at the price of
local democracy. Moreover, it was soon followed by similar developments in some
popular movements, in particular the cooperative movements in the 1970s and 1980s.
This is discussed in greater detail below. In addition, Sweden is well known for its big
multinational companies, like Eriksson, Volvo, IKEA, Hennes & Mauritz, etc. In fact,
Sweden has one of the highest concentrations of big multi-national companies of any
country in Europe (Pestoff, 2005). They help illustrate the rapid growth of mega
organizations in the post WW II period in all sectors of society, public, private for-profit
and the third sector.
Third, in the late 1980s the Social Democratic government de-regulated Swedish
agricultural policy, thereby eliminating tariffs on imports and subsidies on exports of
food stuff, as a first step toward Swedish membership in the European Union. This
significantly weakened the agricultural cooperative movement that de facto
implemented these significant financial transactions through their branch organizations.
Fourth, there was a national process known as the de-corporatization of Swedish
political institutions that replaced many democratic processes, at the national level, with
liberal ones that were more in line with neighboring EU countries and with the growing
influence of neo-liberalism across Europe.
This included fundamental changes in the way in which major reforms were reached
and implemented in Sweden. The de-corporatization of the 1990s culminated with
elimination of the last of the main manifestations of democratic corporatism
(Heckscher, 1944; Rokkan, 1966) that attributed a central role to well-organized
economic political and social interests, like the unions and employer organizations, the
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cooperative movements, etc. The three main corporatist institutions were comprised of
parliamentary or governmental committees, the subsequent remiss process and lay
representation on the boards of public administrative bodies. Parliamentary committees
deliberated on and proposed major social reforms, but starting in the 1980s fewer and
fewer of them included representatives from the major social interests and more of them
were comprised by a single appointed governmental official. The reports of such
committees were then sent to a much larger number of social actors on remiss and their
answers were collected and considered prior to proposing most major changes in the
law. However, shorter remiss times made it difficult for democratically structured
popular movements, like the unions and co-ops, to provide a remiss answer to proposed
changes in the law.
Then, in 1990 the Confederation of Swedish Employers (SAF) proposed scrapping
the system of lay representation on the boards of public administrative boards and the
neo-liberal Bildt government quickly followed suit and removed all representatives of
organized social interests, thereby replacing a democratic system with a more liberal
one (Trägårdh, 2010). Today democratic corporatism has largely been replaced by
lobbying. This sharply curtailed the input of an earlier generation of civil society
organizations and popular movements in public policy making and implementation and
in effect eliminated “… popular movement democracy or associative democracy”, to
borrow Hilding Johansson terminology (Johansson, 1955).
Fifth, in the early 1990s the same neo-liberal government eliminated most restrictions
on public financing of alternative provided social services, including nonprofit and for-
profit providers. This was tantamount to a de-regulation and de-monopolization of
public services that led to the growth of alternative provision by “free” schools,
cooperative childcare, private healthcare, eldercare, etc. Today, competition and
contracting out are the key words in public service provision. While this initially opened
some new space for the third sector provision, in the long run big private sector
providers have been the primary beneficiaries from such de-regulation and de-
monopolization. International venture capital firms now own and run four of the five
largest “free school” concerns in Sweden.
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C. A dynamic model of cooperative development
The continued analysis will focus mainly on internal developments in the Swedish
cooperative movements. The reasons for this are several. First, these developments
reflect the impact of changing international and domestic pressures. Such changes
reflect the loss of their previously held privileged position, as part of a democratic
corporatist system. Second, these changes clearly reflect the dilemma facing co-
operatives as hybrid organizations. In order to be successful and survive, they must
balance diverse, sometimes competing interests of their various stakeholders or
environments where they operate. Third, the development of the Swedish cooperatives
clearly expresses decisions made by their leaders. They may also reflect the exterior
forces of the market and politics of a given country, but nevertheless they are internal
decisions. Fourth, they can also express greater or lesser degrees of intelligent
organizational design. Here I rely primarily on the dynamic model of cooperative
development presented elsewhere in this volume. I will concentrate on two of its basic
dimensions: the logic of competition and the logic of membership.
In this section I present an interactive model of cooperative developments after which
I discuss some of the major changes in the Swedish consumer cooperative movement in
the 20th Century. This interactive model underlines the importance for cooperatives to
adapt and adjust to major changes in their environment. It also points to the need for
cooperatives as hybrid organizations to balance the claims of various stakeholders or
strategic groups, so that no single group dominates it permanently. If management
continues to ignore the demands of some important stakeholders and pursues only one
goal, like maintaining its market shares or increasing its efficiency, then it risks
changing the co-op into another type of organization and losing the support of some of
its original stakeholders. This is seen clearly in the Swedish consumer co-ops, but is
also evident in the agricultural co-ops in Sweden as well. We need, therefore, to
consider each environment or dimension more closely.
The four most important environments for cooperatives as hybrid organizations in
industrial and post-industrial societies are: the market, their members, their employees
and the authorities. Together they comprise the most important limits on the actions and
decisions of cooperatives and their managers. Each of them acts as a powerful constraint
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on the freedom of cooperative leaders and their decisions. Each of them promotes their
own particular values and represents their own particular goals, which at times may
come in conflict. Each of them is based on a separate logic, so it is possible to speak of
four competing logics or principles of cooperatives: the logic of (efficient) competition,
the logic of (democratic) membership, the logic of (political) influence and the logic of
(personnel) management.
The four most important environments for cooperatives as hybrid organizations in industrial and
post-industrial societies are: the market, their members, their employees and the authorities.
Together they comprise the most important limits on the actions and decisions of cooperatives
and their managers. Each of them acts as a powerful constraint on the freedom of cooperative
leaders and their decisions. Each of them promotes their own particular values and represents
their own particular goals, which at times may come in conflict. Each of them is based on a
separate logic, so it is possible to speak of four competing logics or principles of cooperatives:
the logic of (efficient) competition, the logic of (democratic) membership, the logic of
(political) influence and the logic of (personnel) management (See Figure 1 above).
Both members and employees comprise the internal environment of cooperatives, as
they are part of the organization; while markets and authorities comprise the external
environment of cooperatives, since they are outside the organization itself. At the same
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time, cooperatives can also be analyzed in terms of their commercial and social/political
dimensions. Here markets and employees comprise the commercial dimension, while
members and authorities comprise the social/political dimension of cooperatives. The
commercial dimension is something cooperatives share with other firms in the market
while also competing with them. The social/political dimension of cooperatives is
something they hold in common with other popular movements, non-governmental
organizations, voluntary associations and third sector organizations.
Research on Swedish cooperative movements clearly shows that their social
dimension helps to set them apart and make them different from their competitors. On
the one hand, the active promotion of social values provides cooperatives with a clear
profile, helps to distinguish them from their competitors and gives them a competitive
advantage, if properly understood. On the other hand, the loss of social values denies
co-ops a natural profile, makes it harder for members and consumers to distinguish
between them and their competitors, and denies them a natural competitive advantage.
1. The logic of competition or amalgamations and concentration?
As noted earlier, Sweden experienced a dramatic reorganization of its local democratic
institutions in the 1950s and again in the 1970s that reduced the number of local
municipalities from approximately 2,500 in 1950 to 290 in 1980. This was done with
the aim of creating the necessary demographic and financial base for expanding the
welfare state, but it came at the price of local democracy. Moreover, it seems that certain
popular movements, including some of the cooperatives, followed suit and adopted the
logic of “big is beautiful” in their own organizations. The 1960s and 1970s saw some
cooperative movements follow in the footsteps of the public sector by promoting larger
local units, with more professional employees and fewer elected offices (Pestoff, 1979).
This resulted in a dramatic reduction of the chance for ordinary members to gain an
elective office, increased membership alienation and led to a sharp decline in
membership participation and engagement in such organizations. Some of these
organizations were closely allied with a major political party, like consumer and
agricultural cooperative movements, with the Social Democratis and Center Parties
respectively (ibid. and Pestoff, 1991).
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I will compare the impact of amalgamations in general on some of the established
cooperative movements in Sweden. While comprehensive data is not available for all
years, it is available until the end of the 1970s for the building and tenant cooperatives
(HSB), the consumer cooperatives (Konsum & KF), and one major branch of the
producer cooperatives (SLR). Information from these three cooperative movements
permits us to compare the impact of amalgamations in terms of their democratic
structures. With the exception of the producer cooperatives, these organizations grew
steadily in membership during the first seven or eight decades of the 20th Century. The
building and tenant cooperatives, HSB, grew from 10,303 members in 1930 to 595,426
in 1988; while the consumer cooperatives grew from 74,000 members in 1910 to 2.1
million in 1990. The supply and marketing association (SLR) of the Swedish producer
cooperative movement (LRF) experienced more fluctuation in its membership, due to
the economic impact of the Great Depression and continually declining employment in
agriculture. SLR had 84,726 members in 1920, 54,249 in 1950, 145,019 in 1960,
112,924 in 1977. By the year 2007 HSB decreased to 536,895 members, the consumer
co-ops now claimed 3.1 million “members”, while SLR declined to only 42,000
members.
Amalgamations had a different impact on these popular movements. In the building
and tenant cooperatives (HSB) they primarily affected the municipal or regional level,
but not the individual small local building and tenant co-ops. In the other two Swedish
co-ops amalgamations mostly impacted the lowest level, where rank-and-file members
have most of their regular contacts and where they can first hope to gain an elected
office or honorary post if they become involved. However, local building and tenant
cooperatives register their stock of apartment buildings as separate legal entities, which
cannot be amalgamated, thus amalgamations in HSB at the municipal or regional level
somewhat unintentionally preserved the local democratic structures. In the consumer
cooperatives (Konsum & KF) the number of local co-ops began to decrease early in the
organization’s history, as they moved from democratically controlled shop cooperatives
to town or city-wide co-ops, and later regional consumer cooperative societies. This
resulted in a steady decrease in the number of democratic structures where members
could have influence, become active and hope to gain an elective or honorary office.
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The farmers’ supply and cooperative marketing association (SLR) demonstrates a
similar pattern of development in their democratic structures.
2. the logic of membership or disappearing democratic structures?
Comparing the development of the democratic structures in these three cooperative
organizations they all grew in size, but some did so much more than others. Keep in
mind that this is the same period of radical reorganization and growth in the average
size of local governments in Sweden. Between 1950 and the end of the 1970s the size of
the local democratic units grew in HSB from 54 to 86 members. Konsum & KF grew
from 1,413 to 11,092 members; while SLR grew from 221 to more than 5,000 members.
This implies that a member’s chance of gaining an elective office or honorary post in
any of these popular movements decreased in proportion to the growth in size of the
local organization. By the end of this period, chances for members to gain an elective
office were greatest in building and tenant co-ops and least in the consumer
cooperatives. As a member’s chance to gain an elective office or honorary post in a
cooperative movement decreased, many cooperatives clearly lost their ability to perform
their often noted function as schools of democratic values and virtues. By the year 2007
the average number of members reached 138 for HSB, over 60,000 for the consumer co-
ops and 1,680 for SLR1.
In addition, most cooperative movements also experienced a rapid growth in the
number of employees. By 1977 there were two paid staff for every elected officer in
SLR. This reflects a change in the balance of power between these two groups of
leaders. The professionalization of such organizations is also related to questions of
member influence and can be expressed in terms of a ratio of elected to paid leaders, or
an index of democratic control. Furthermore, a separate study showed that both the ratio
of elected officers to staff per 1,000 members decreased with increasing size for both
the agricultural and consumer cooperatives, but not for the building and tenant
cooperatives, due to the maintenance of local democratic structures by the latter
(Dellenbrant & Pestoff, 1980). Thus, it seems possible to achieve a better economy
without having to sacrifice membership democracy, as seen in the building and tenant
co-ops.
1 The lack of reliable information for SLR in 2007 makes this average less comparable with figures 30
years earlier.
17
1
Moreover, in the consumer co-ops member resolutions to the annual general meetings
concerning matters like support for the international boycott of agricultural products
from South Africa, international sympathy measures for purchasing union label products
to support the struggle of the United Farm Workers (UFW) in California, removing
men’s magazines from the news racks or purchasing ecological products in order to
promote sustainable agriculture were all resisted in the name of competition. The
cooperative managers argued that the consumer co-ops had to offer the same products as
their competitors, otherwise their members would shop elsewhere. Membership
influence on such issues was also curtailed. Member resolutions could only be discussed
in the local district where they were submitted, and no longer by interested members in
neighboring districts at the co-ops’ annual general meetings. In the early 1970s an
article sent to the cooperative weekly journal, Tidning Vi; calling for international
solidarity for the UFW’s campaigns was rejected in the name of devoting space for a
special issue on men’s ties, but it was later published in a trade union journal. A letter to
the editor discussing the future availability of the cooperative journal to members, when
the annual rebate was eliminated by most local co-op societies in the late 1970s, merely
resulted in strict new limits being placed on the length of a member’s letters to the
journal in the future.
3. the logic of influence or cooperatives and policy-making?
All three of the established Swedish cooperative movements played a central role in the
development of the welfare state in their respective areas, agriculture policy, consumer
policy and housing policy. However, the pioneer role of all three of these cooperative
movements diminished over time, with changing circumstances and changing social
forces, as will be seen below. The agricultural cooperatives and their branch
organizations became the lynch-pin of Sweden’s highly regulated agricultural policy
between 1945 and 1990. Their dominance of the seven agricultural product regulation
boards turned them into private interest governments (Streeck & Schmitter, 1985). The
import and export of major agricultural commodities was closely regulated by them,
they levied high import fees on all agricultural products imported to Sweden and
heavily subsidized Swedish agricultural exports until the end of the 1980s, shortly
before Sweden joined the European Union (Pestoff, 1991). The housing cooperatives
18
1
played a central role in establishing Swedish housing policy and the massive
modernization of housing stocks after the end of the War (ibid.).
Swedish consumer cooperatives also played an instrumental role in the development
of Swedish consumer policy in the post-war period. Until it joined the EU, Sweden
pursued an active consumer policy, in line with its much better known active labor
market policy. The government played a central role in regulating many issues that were
left to the market to “solve” in more market oriented or liberal countries. In doing so,
Sweden attempted to develop a counter-vailing power to the well organized business
interests of industry and the wholesale and retail sectors (Pestoff, 1984). It brought on
board representatives of the two main trade unions, alongside the consumer
cooperatives, as consumer representatives on most of the public agencies charged with
regulating agricultural and consumer policy (ibid.). The consumer cooperatives were
highly instrumental in developing this active consumer policy; they often set the
business standards that later became codified into consumer laws and regulations.
However, by pursuing the logic of influence, the logic of membership in the
consumer co-ops once again became crowded out; just as it did with the logic of
efficient competition. In a competitive market the higher standards maintained by the
cooperatives were once a comparative advantage that appealed to many families. They
provided the consumer cooperatives with a self-enforced floor that was often hard for
their competitors to meet. Once codified, they could still claim to have set the standards
for all Swedish consumers, but they also became very reluctant to provide anything
more for their customers and members. When these standards became consumer laws
and regulations, this one-time floor for the consumer cooperatives soon became a
ceiling for all commerce, including the consumer cooperatives. In the name of
competition, they became reluctant to make any consumer improvements not called for
by law. They were unwilling to assume any additional costs of benefits not shared by
their competitors. Over time consumers became aware of the loss of the cooperative role
as a standard bearer for consumers, which also implied the loss of their competitive
advantage. The local consumer cooperative gradually became just another shop in the
eyes of many customers and members.
19
1
This brief overview shows that once the consumer co-ops achieved their consumer
political aims the logic of (political) influence, in combination with the logic of
(efficient) competition resulted in a leadership that was very reluctant to differ
significantly from its competitors. Thus, the consumer co-ops lost one of their main
competitive advantages on the market, their unique possibility to promote the political
and social interest of their members as consumers. The consumer cooperative leaders
also acted to restrict the logic of membership, thereby curtailing member influence in
the running of the consumer cooperatives during the 1970s and 1980s, in the name of
competition. However, by failing to take advantage of their unique channels for
members’ input, once again they lost an important competitive advantage.
D. Co-op Norden – a mega amalgamation in the 21st Century
1. The first 100 years of the Swedish Consumer Cooperative Movement
Today Sweden is light years from the situation when the Swedish consumer co-ops
started providing goods for their members more than 100 years ago. In 1899, when the
Swedish Cooperative Union & Wholesale Society (Kooperativa Förbundet or KF for
short) was established, the consumer cooperative movement had a clear social profile.
This profile included cash-only sales, unadulterated products, breaking up production
and/or sales monopolies, and democratic decision-making structures, almost two
decades before Sweden adopted universal suffrage, etc. Table 1 in the Appendix
provides a brief overview of the development of the consumer co-op movement from
1910 to 2010, in terms of the number of members, local societies, employees and shops.
At the beginning of the 20th century the Swedish consumer cooperative movement
was mainly comprised of numerous semi-independent local cooperative societies. In
1910 there were nearly 75,000 individual members organized into nearly 400 local
consumer cooperative societies, for an average size of less than 200 members. Just ten
years later these figures had increased dramatically: the number of members approached
250,000, the number of local societies was nearly 1,000, but the average size of the
local societies was still only 250. By 1950 there were nearly 1,000,000 members in
nearly 700 local societies, for an average size of nearly 1,500 members. They employed
a total of 50,200 persons, and had over 8,000 shops. Forty years later, in 1990,
membership reached over 2.1 million, but the number of local societies decreased to
20
2
only 120, for an average of 17,500 members per society. The number of employees
decreased radically when the consumer co-ops sold off their production capacity,
declining from nearly 72,000 employees in 1980 to only 34,000 in 1990, while the
number of shops decreased to only 1,687 the same year.
These developments had a detrimental impact on the democratic side of the Swedish
cooperative movement and the logic of membership. This was clearly reflected in
member participation at the annual general meetings of local cooperative societies, as
well as the index of democratic control2 (Pestoff, 1991). The growing size of local
cooperative societies in major urban areas turned members into passive consumers,
whose only expression of loyalty to the movement was reduced to purchasing most of
their groceries at the local cooperative. However, passive members seldom show loyalty
to a movement that has turned its back on them. Many members began to make their
purchases at the closest grocery store rather than the closest cooperative shop. This in
turn deteriorated the competitive position of the Swedish cooperative movement. These
developments are interrelated or the opposite sides of a coin, that resulted in a
downward or negative spiral of development.
Then, in 1991 a huge amalgamation resulted in completely new institutional
structures, ones that ruptured ties with the majority of their members and replaced
formal democratic structures with ordinary commercial relations. The new organization,
called Coop Sweden, was a complicated conglomerate that owned the five biggest
regional societies3, and they in turn owned the central organization, KF. These five
regional societies function as "integrated consumer societies", while the remaining 115
local Konsum societies continued as semi-independent members of KF and retained
their democratic structures. The business side of the "integrated societies" in Coop
Sweden was completely severed from its membership organization, and members no
longer had any influence, nor could they participate in running their regional
cooperative society. This also resulted in very complex decision-making structures that
few knowledgeable and well-informed persons can truly understand. Moreover, in the
2 The ratio or proportion of democratically elected officers to salaried staff.
3 They are Svea (several large cities in middle Sweden), Stockholm, Norrort (the northern suburbs of
Stockholm), Väst (Gothenburg & Bohus), and Solidär (southern Sweden, including Malmö).
Together they claim nearly 2 million "members", or more than three-fifths of the total 3 million
"members" of KF (www.kf.se, 17 Aug., 2008).
21
2
early 1990s Coop Sweden and its five regional members changed their legal status from
economic associations to limited companies, i.e., from an association of members to an
association of capital, thereby eliminating member influence.
2. A mega amalgamation in the 21st Century – Co-op Norden
By the year 2000, the number of "members" increased to over 2.5 million, while the
number of local societies decreased to only 75, resulting in an average size of over
34,000 "members" per local/regional society. Also the number of employees had
decreased further to about 27,000 and the number of shops decreased even more, to only
784, for an average of over 3,000 "members" per co-op shop. Ten years later, there were
more than two million "members" in the five regional members of Coop Sweden
together with one million in the 39 remaining local Konsum societies4. Thus, in the past
100 years the number of members has increased by several hundred percent, while the
number of local cooperative societies was reduced to only a fraction. As a consequence,
the average size of local cooperative societies increased from about 200 members to
more than 70,000 in 2010. In the process, the semi-independent small local cooperative
societies that were the backbone of the movement in the late 19th and early 20th century5
were relegated to a marginal position compared with the mega-societies formed in
major urban areas through a process of amalgamations starting in the 1960s. Thus, it
could be argued that Coop Sweden at the beginning of the 21st century comprised a
unique organizational form, a "manager-run" co-op, without the bothersome influence
of members, at least in the five big regional societies of Coop Sweden.
Finally, in 2001 the Danish, Norwegian and Swedish consumer cooperative
movements decided to create Coop Norden, in order to protect their market shares in the
respective Nordic countries against foreign competitors. The agricultural cooperative
movement has also become "big business" and is now involved in a series of
amalgamations in neighboring countries, thereby becoming an important actor in the
European Union. SLR, the supply and marketing association of the Swedish producer
4 Members in these 46 local and regional societies retained their democratic rights of one member/one
vote. However, only 4% of them attended the Annual General Meeting in 2007.
5 The rural village of Åmot has a small local Konsum society. It was first started in the 1860s and re-
established in the mid-1920s. Then in 1930 it purchased the grounds for its present store. In 1936 the
association had 256 members, while 60 years later it claimed 372 members, from a total population
of 497 inhabitants. In 2007 it remained an independent Konsum society, with 337 members. It
continued to provide a dividend to its members in recent decades.
22
2
cooperative movement, claimed employees in 19 countries in 2007. Thus, both these
popular movements have been transformed into huge commercial conglomerates,
operating successfully in several countries, but far removed from their origin as popular
movements that promoted social values, and that were democratically run.
The nature of the membership in the Swedish consumer cooperative movement has
changed dramatically, from active to passive membership. In the 1960’s the Swedish
consumer co-ops still required that members saved all their sales slips and report their
grocery and household purchases at the end of the year in order to get the annual
dividend that depended on the amount they spent. By contrast, today such mundane
tasks are replaced by a plastic card that electronically records all sales and provides
bonus points on their purchases, similar to those provided by all other commercial
chains. Thus, today "membership" in a consumer co-op means as much or as little as
"membership" in American Express, the IKEA Family or the H&M Club. There are no
longer any democratic rights and responsibilities associated with membership in most
local consumer co-ops.
E. Co-production and economic democracy: a roadmap for the future?
This section makes some proposals for addressing the loss of relevance of cooperative
solutions in Scandinavian societies today. Quite simply they must find ways to make
membership meaningful once again.
1. Co-Production and Welfare Service Cooperatives
One way to promote democracy in the daily lives of cooperative members and ordinary
citizens would be to actively promote cooperative alternatives to both public and private
for-profit provision of basic welfare services. Cooperatives and social enterprises
facilitate greater citizen involvement in the provision of social services by promoting
greater co-production and co-governance in public services. Co-production is the mix of
activities that both public service agents and citizens contribute to the provision of
public services. The former are involved as professionals or "regular producers", while
"citizen production" is based on voluntary efforts by individuals or groups to enhance
the quality and/or quantity of services they use. In complex societies there is a division
of labor and most persons are engaged in full-time production of goods and services as
regular producers. However, individual consumers or groups of consumers may also
23
2
contribute to the production of goods and services, as consumer-producers (Ostrom,
1999, Parks, et al. 1981 & 1999). The participation of citizens in the provision of
welfare services through cooperative social services makes a unique contribution to
democratic governance not found in either public services or private for-profit firms
(Pestoff, 2008: Pestoff, 2009).
There are four kinds or dimensions of citizen participation in the provision of public-
financed welfare services. They are economic, social, political and service-specific
participation. In an interesting and important study, Johan Vamstad (2007) compared
four types of childcare providers: parent cooperatives, worker cooperatives, municipal
services and small-scale for-profit firms in two Swedish municipalities: Stockholm and
Ostersund. It is clear that other forms for providing childcare allow parents a limited
degree of participation in public-financed childcare, but this study showed that the
parent cooperatives provide parents with unique possibilities for active participation in
the management and running of the childcare facility. This form alone allows parents to
become active co-producers of high quality childcare services for their own and others’
children.
Vamstad (2007) also compared the influence of parents and staff in the same four
types of service providers. Both the parents and the staff of parent as well as worker
cooperatives claim they have more influence than those employed in municipal facilities
or for-profit firms. Thus, one important conclusion from Vamstad’s study is that neither
the state nor the market allows for more than marginal or ad hoc participation or direct
influence by parents in the childcare services. Although discussion groups or "Influence
Councils" can be found at some municipal childcare facilities, but they only provide
parents with very limited influence. More substantial participation in economic or
political terms can only be achieved when parents organize themselves collectively to
obtain better quality or different kinds of childcare services than either state or market
solutions can provide. Moreover, worker cooperatives provide the staff with maximum
influence, resulting in more democratic work places.
2. Multi-stakeholder co-ops
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2
A cooperative is a hybrid organization that often combines two functions or roles, where
the owners contribute the finances as well as supply the raw materials, provide the
necessary labor or purchase the firm’s products. Such traditional cooperatives are single
stakeholder firms. They are commonly found in agricultural producer co-ops, worker
co-ops, consumer co-ops, building & tenant co-ops, etc. Here a single group of
stakeholders provides most or all of the finances, they “own” the co-op and they thereby
control it. Other stakeholders may contribute to the goods or services produced, but they
do not own it, and they have no voice in running it. They are therefore denied any
influence in decision-making and have no claim to the eventual surplus produced. Thus,
the staff, and/or consumers commonly find themselves excluded from influence in the
management of the co-op and they lack a share in its surplus or profit. This clearly
influences the incentive structures available to various groups that contribute to the co-
op’s surplus, since they have no influence or ownership claim.
I maintain that democracy and the market could and should be more closely related,
through intelligent organizational design. Here a multi-stakeholder model can provide
an important concept, model and institution for understanding, developing and
promoting democracy at the micro-level in the daily lives of ordinary citizens,
particularly in work-life. Cooperatives could make a unique contribution to enriching
work-life and to renewing democracy. They could provide a good example and set the
best practices, both in manufacturing and services.
A multi-stakeholder organization is a firm or co-op that legally recognizes more than
one type of stakeholder, gives them representation in its decision-making structures and
provides them with a share in the organization’s surplus or profit. Multi-stakeholder co-
ops, therefore, make several stakeholders its owners, create governance structures that
include various groups in the co-op’s internal decision-making and provide them with a
share in the surplus or profit. In addition, by virtue of doing so, they also contribute to
the growth and spread of democratic attitudes and habits among the various owners,
something that is highly uncommon in today’s co-ops. Thus, multi-stakeholder
organizations could conceivably play an important indirect role in inculcating and
spreading democratic attitudes and habits among the general public, particularly for the
staff, since it would expose them to a different reality 40 hours per week for nearly 48
weeks per year as long as they worked there. This could contribute by making
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2
democracy a non-trivial aspect of the daily life of some ordinary citizens. Thus, multi-
stakeholder co-ops would include citizens in their daily lives, perhaps in several roles,
as financers, suppliers, workers and consumers.
2. Creating trust and the provision of welfare services
Many countries in Europe are searching for new ways to engage citizens and involve the
third sector in the provision and governance of social services. At a general level the
reasons are similar throughout Europe. First is the challenge of an aging population,
second is the growing democracy deficit at all levels, local, regional, national and
European, and third is the semi-permanent austerity in public finances. In any given EU
member state the reasons will vary and may be more specific; however taken together
they imply a major legitimacy crisis for the public sector as a provider of welfare
services.
In a European context, we need to consider the future of democracy and the welfare
state, as well as the role of voluntary associations and cooperatives in renewing both of
them. However, in order to do so, we also need to pay more attention to trust and
understand how such organizations can create trust in the absence of a non-distribution
constraint or of American tax laws. Trust could and should provide many organizations
found in the third sector, like social enterprises and co-ops, with a natural competitive
advantage in the provision of welfare services, if correctly understood and actively put
to use.
Social enterprises take three different forms in Sweden, i.e., consumer co-ops, worker
co-ops and voluntary organizations. Consumer co-ops can engage their members in the
provision of welfare services, they can empower them as co-producers and can provide
them with greater influence and control than many other alternatives. Consumer co-ops
can, therefore, create trust between the consumers and providers of social services.
Worker co-ops usually result in more engaged and enthusiastic staff, which is often
reflected in the quality of the services provided. Better quality services and more
engaged staff can also result in greater trust between the consumers and providers of
social services. Voluntary organizations that combine both the staff and clients as
members function as multi-stakeholder organizations and can also contribute greater
trust between the consumers and producers of welfare services (Pestoff, 1998 & 2005).
26
2
Trust is the key to the future in business, in particular when it comes to social
services. Private commercial firms, on the one hand, recognize this, but they often lack
natural ways of generating trust. They must rely on advertising and other strategies to
try to achieve what comes naturally to cooperatives. The growing interest in corporate
social responsibility (CSR) and consumer relationship marketing (CRM) in business
schools are two expressions of the need for private companies to create more trust. Co-
ops, on the other hand, have it naturally, but fail often to recognize trust as a natural
competitive advantage of the cooperative form.
F. Conclusions and discussion: Making Membership Meaningful
More than fifteen years after the Centennial Meeting of the World Congress of the
International Cooperative Alliance, ICA in Manchester, it is perhaps time to reflect more
seriously on theme of the report delivered at its 100 jubilee. It was given the title
Making Membership Meaningful (ICA, 1995). All too often consumer cooperatives and
other cooperative movements have done just the opposite, they have made membership
meaningless, with the result that members eventually lose interest in them. Cooperatives
in post-industrial society need to reinvent membership and relate it to activities and
services that are the most meaningful to their members. They need to develop a unique
profile, one based on human needs and social values. They need to rediscover their
social dimension in order to emphasize and take advantage of their natural competitive
advantage. It is by promoting their social values and responding to the growing demand
for welfare services that consumer cooperatives can play important economic, political
and social roles in a globalized economy. In this way they could also contribute to the
development and renewal of democracy and the welfare state in the 21st Century.
The time has perhaps come in many post-industrial societies to ask whether consumer
co-ops should perhaps consider selling off all or some of their stores and reinvest their
collective resources in the development of welfare services, where co-ops could and
should have a natural competitive advantage. In the post-industrial or service society of
Europe, citizens are increasingly dependent on social services in their daily lives. This
motivates closer collaboration between the established cooperative movements and new
social service cooperatives of the type found in Sweden and/or more sustained efforts
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2
by established cooperatives to provide basic social services for their members and all
citizens.
The provision of cooperative social services becomes increasingly feasible and
necessary for rejuvenating and sustaining both the cooperative movements and the
welfare state. Co-ops must adapt to the changing needs and demands of their members
and the citizens. In doing so, they can revitalize themselves and renew democracy, both
internally and externally. They can make membership more meaningful and citizenship
more participative. They can once again serve as a school of democracy and help to
democratize the welfare state from within.
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Appendix:
Table 1 Development of Swedish Consumer Cooperatives, 1910-2010.
Year
Membs in
1000s
No. of co-
op societies
Membs per
local co-op
Total no.
employees
No. of sales
outlets
Membs per
sales outlet
1910 74 391 188 na 448 165
1920 236 941 250 na 1,592 148
1930 450 837 539 13,700 3,302 136
1940 700 687 1,019 29,300 5,301 132
1950 926 681 1,413 50,200 8,017 116
1960 1,172 592 1,988 57,900 6,651 139
1965 1,323 338 3,913 58,100 3,901 339
1970 1,605 232 6,920 65,500 2,786 576
1975 1,801 188 9,580 68,000 2,358 764
1980 1,882 152 12,380 71,751 2,068 910
1985 1,971 142 13,879 61,032 1,897 1,039
1990 2,100 120 17,500 33,760 1,687 1,245
1995* 2,213 93 23,796 31,233 1,399 1,582
2000* 2,563 75 34,173 26,996 784 3,269
2005* 3,000 58 51,731 na na ---
2010* 3,145 44 71,476 14,638 866 3,632
Source: V. Pestoff, 2008; na=not available; *After 1991 "members" in Coop Sweden, who represent 60%
+ of all members, have the same trivial rights and responsibilities as "members" of American Express or
the IKEA "family". These rights and responsibilities are purely commercial, not democratic. They can
apply for bonus cards to register their purchases and get occasional bonuses, based on their purchases.
Most retail firms provide similar benefits for their customers today.
Coops & Dem in Scan ppf
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