Cooperatives of rural Russia: retrospective review of cooperative identity and principles

1.

COOPERATIVES of RURAL RUSSIA:
RETROSPECTIVE REVIEW of COOPERATIVE IDENTITY and
PRINCIPLES
Alexander Sobolev
ICA COOOERATIVE RESEARCH CONFERENCE FOR THE 33RD WORLD COOPERATIVE CONGRESS
28-30 NOVEMBER 2021
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2.

MAJOR QUESTIONS OF OUR RESEARCH:
When and how did the rural cooperatives
manage to succeed upholding the
cooperative identity and principles?
What are the constraints related to
cooperative identity and principles hindering
the development of cooperatives in Russia?
The cardinal cooperative problem is:
which organization can be considered cooperative?
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3.

PRE-SOVIET COOPERATIVES 1865 -1917
Schulze-Delitzsch, Raiffeisen and Rochdale cooperative models were used by the first credit and
consumer cooperatives in Russia
Articles of Association of the first cooperative in Russia
Rozhdestvensky Savings
and Loan Association (October 22, 1865)
The Siberian union butter-making artels (production and marketing cooperatives)
selling
butter to the international markets (1911)
Moscow Union of Consumer Societies (MUCS – Centrosoyuz)
member of ICA (1903)
Moscow Narodny Bank (1912-1918)
central bank of all cooperatives in Russia
Over 1/3 peasant farms participate in cooperative movement
Results of upholding the cooperative principles cooperative sector formed and fast growth of
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“cooperative people” in rural Russia

4.

Russian cooperatives: heading to the cooperative sector
‘Reference point’ for cooperative
movement of Russia – 1917:
• Created prerequisites for the design of the
cooperative sector of Russia;
• Various types of cooperatives, their unions
and congresses;
• Uniform Cooperative Law;
• All-Russian Council of Cooperative
Congresses;
• Educational cooperative environment.
Cooperative
People
+
Cooperatives
and their
Unions
+
Model of an isothermal railway carriage created
under the direction of N.V. Vereshchagin
Cooperative
Infrastructure
=
Cooperative
Sector
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5.

SOVIET COOPERATION
The Soviet government in the first decades
used cooperation as a tool to suppress certain
social groups
1917 – 1991
Soviet cooperation – an instrument
for solving state problems
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6.

Сooperatives in the Soviet regime:
deformation, restriction and elimination
By 1929, 13 million (more than 55%) individual farms were members of more than 100 thousand
different cooperatives (GSE, 1953, vol. 38, p. 444). Middle-class peasant farms often act as central
economic units instead of well-to-do farms.
Of each hundred farms that had one head of
workingcattle, 22 farms were members of the
cooperatives.
Accordingly, households with two cows - 33%;
farms with three cows – 47%;
farms with many cows - 20%.
Source: Lintvarev, 1929
The differentiation of the peasantry gave several layers of
‘homogeneous economic units’ in the generation that received
a strong ‘cooperative vaccination’.
Change of priorities from a political point of view: prohibition of the existence of market-type cooperatives
of economic units. The abolition of urban consumer, credit and producer (promyslovye) cooperative systems.
Creation of organizations on a simplified cooperative basis of the non-aggregate type — collective farms and
consumer cooperation of the Centrosoyuz system.
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7.

In the 1930s, collectivization transformed agriculture: instead of 25 million peasant farms, almost two
hundred thousand collective farms appeared
(Sel’khoz, 1935, pp. 465, 471, 633, 634, 640).
The place of the peasant gradually began to occupy a different social type –
the collective farmer
The alienation of peasants and the elimination
of "cooperative people"
I. In 1930 collectivization periods were set for
the regions, and the authorities used the most
brutal administrative resources. The result was
a division into two heterogeneous cohorts:
collective farms and individual farmers.
II. In 1939 the sizes of personal land from ¼ to
½ ha are established. This land could be in
personal use. As a result, peasant households
were differentiated by the size of land plots.
Figure. Share of households in production cooperatives in
the USSR 1927–1970 and share of sown land in production
cooperatives in Russia 1918–1965 (in percent).
Source: Sel’khoz (1935,1971).
III. In 1958 state farms pledged to buy
livestock from workers and employees,
providing them with products. Thus, the goal
was to reduce the need for personal subsidiary
plots. As a result, there was a differentiation in
the number of cattle in the peasant farmstead.
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8.

PRESENT-DAY COOPERATIVES – THE PAST 30 YEARS
Interest of the small land owners in cooperatives is at a very low level
1) Share of the farmers cooperatives in the overall agricultural production is
insignificant (negligible)
The Government attempts to revive the cooperative movement from the top down
through establishment of sectoral cooperatives with special legal status and
noncommercial organizations (e.g. agricultural consumer cooperatives – SPoK)
2) Production cooperative – direct successors to the collective farms – with the
legal status of commercial organizations are degrading. They have very little
knowledge of cooperative principles application
3) Lack of cooperative identity is a long-standing problem of post-Soviet consumer
cooperative of the Centrosoyuz group despite their noncommercial organization
status
The legal form came into collision with the economic nature of the cooperative
organizations
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9.

THE PROBLEM OF STABILITY OF AGRICULTURAL
COOPERATIVES
The scale of the implementation of measures to support the
development of SPoK
Support
measures
Financial
Organizational
and advisory
Organization of
product
distribution
channels
Education and
training
frames
Tax benefits
Mechanism
Grant support for the development of the material and
technical base of agricultural cooperatives
Granting subsidies to agricultural cooperatives for supplying
members of a cooperative and purchasing products produced
by members of a cooperative
Cooperation Development Center (competency center in the
field of agricultural cooperation)
Three-level management system for the development of
agricultural cooperation
(region + district + settlement)
Organization of participation of agricultural cooperatives in
fairs and exhibitions
Organization of work with chain stores on the sale of
agricultural cooperatives and farmers
Creation of ORC on the basis of agricultural cooperatives,
creation of agro-industrial clusters
Educational courses for managers and specialists of
agricultural cooperatives, educational projects "Youth
Cooperation"
Establishment of a preferential tax regime for agricultural
cooperatives and their members according to the simplified
tax system and the patent tax system
The share of
constituent entities
of the Russian
Federation,
put it into practice
94 %
The legal status of SPоK
(without credit) in the Tver
region on 31.07.2019
25 %
19
86 %
26 %
5
64
78 %
21 %
registered
10 %
61 %
in the stage of
reorganization or liquid
17 %
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10.

Quantitative indicators of cooperatives
NUMBER OF AGRICULTURAL CONSUMER COOPERATIVES ON
JANUARY 1 OF THE RELEVANT YEAR
The number of agricultural consumer
cooperatives
January 1 of the corresponding year
Year
2013 2017 2018 2018 to
2013, %
Total
7316 5839 5608
76,7
including:
Processing
1107 1032 1111
100,4
Serving
866
813
807
93,2
Marketing 1236 985
926
74,9
Supply
476
425
405
85,1
Credit
1866 1381 1176
63,0
Other
1765 1203 1183
67,0
THE LAYOUT OF THE COOPERATIVES
IN THE RUSSIA
THE LAYOUT OF THE COOPERATIVES
IN THE KURGAN REGION 2018-2019
Hypertrophied
placement
of
cooperatives due to the often
unrealistic
regional development
projects SPoK.
Three regions
(Lipetsk, Penza
and SAKHA)
account for 33% of the total number
of registered SPoKs in Russia
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11.

Key features of
cooperatives:
• There are no ideological foundations of the
cooperative movement: cooperation is
considered exclusively utilitarian.
• Understanding of the nature and behavior of
cooperatives is absent, and factors of their
growth and development are not fully used.
• The state was, is, will remain the most
important factor in the development of
cooperatives
Restrictions on the
development of Russian
cooperatives in rural
areas:
• Backwardness of scientific research;
• Lack of public awareness, other educational
efforts;
• Negative consequences of Soviet cooperatives;
• Primacy of large-scale production;
• Imperfect legislation;
• Insufficient level and effectiveness of state support
for cooperatives;
• Problems of identity loss by cooperatives.
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12.

EXAMPLE OF SCIENTIFICALLY INCORRECT UNDERSTANDING
OF COOPERATIVE IDENTITY
“Big Artel” (1831) – can it be viewed as the first
consumer cooperative in Russia?
Arguments “pro” – Articles of Association, management
bodies and attributes of economic activity;
“Big Artel” – “the Prisoner Co-op”
Artel – burlaks (barge haulers) on the Volga
Arguments “contra” – “Big Artel” – common household of prisoners, that was financially
supported by their relatives sending money
“Big Artel” conceptually differed from the classical artel
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“Big Artel” is a complete antipode of a consumer society of Rochdale type

13.

TYPOLOGY OF ECONOMIC MODELS
CLASSICAL ARTEL
COOPERATIVE
CHARACTER OF VITAL ACTIVITIES
“BIG ARTEL”
society of prisoners
Imprisonment
Deprivation of certain
personal liberties
Objective: “To have a certain
amount in cash at any time”
–
§ 1 of the Articles of
Association
Absent
Personal freedom
Personal freedom
MAJOR PURPOSE
Tackling of economic tasks
and receiving fair
remuneration for the labor
Provision of services to its
members
ENTREPRENEURSHIP
Possible
Typical
NATURE OF ASSOCIATION
Voluntary association of
people who are free to join or
leave the society – members
of artel were selected
according to an intricate
system of criteria
Personal work of the artel
member in joint activities
including production
Personal work of the artel
member in joint activities
including production
did not require obligatory
monetary contributions
Association of people
through voluntary and open
membership
Nominal association of
people, where each one had
no other option but to
become a member
All members actively
participate in business
activities of the cooperative
Shares (share of capital
stock) are owned by the
members (participants) and
cannot be sold or purchased
Common household
PERSONAL WORK AND BUSINESS
ACTIVITIES
MONETARY CONTRIBUTIONS
(SHARES)
GOVERNANCE AND CONTROL
Self-governance, internal
control and mutual help
Obligatory and equal
monetary contributions,
received from relatives
outside the prison,
although well-off members
make greater contributions
Democratic control; each
Nominal control and the
member (due to ownership of rights of the members are not
a share of capital stock) has
equal as material inequality
one vote, regardless of any
is taken into account
other circumstances (one
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member-one vote)

14.

TYPOLOGY OF ECONOMIC MODELS
(CONTINUED)
CLASSICAL ARTEL
COOPERATIVE
SUPREME AUTHORITY
General meeting
General meeting
OWNERSHIP RIGHTS
Working artel members
have priority over capital
and use their common
property according to
joint decisions
Ownership rights belong
to the members, who use
the cooperative services
LIABILITY
Solidary liability of the
members (collective
guarantee) to the external
entities
Limited liability
Profits are distributed
among the members
proportional to the
individual contribution of
each member based on
the rights equality
Surpluses (“profits”) can
be paid back to the
members proportionate to
each member’s volume of
business with the
cooperative
DISTRIBUTION OF PROFITS
(SURPLUSES)
“BIG ARTEL”
society of prisoners
General meetings of classical type are
ruled out and part of the membership
is not required to perform any duties –
§ 65 of the Articles of Association
Formally and nominally ownership
rights belong to the members and is
limited by the amount of funds
available
Absent
Absent
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15.

“BIG ARTEL” IS NOT VIEWED in PARADIGM OF ARTEL
FEATURES AND COOPERATIVE PRINCIPLES
“Big Artel” is not a consumer society, neither can it be considered the ancestor of Russian cooperatives
New conditions and special “cooperative” people (definitely not exiled prisoners and convicts) were
necessary to start cooperative movement and cooperative entrepreneurship in Russia
It’s exactly this kind of people began to adapt European cooperation models to suit the needs of Russian
society in the last third of the XIX century
It was their voluntary creative activity, in natural and unrestricted social and business environment
Portrait Gallery of the first founders of cooperatives in Russia
Alexander Vasilchikov
Nikolay Vereshchagin
Brothers: Svyatoslav and Vladimir Luginin
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RETROSPECTIVE REVIEW: SUMMARY
Cooperative principles are of ultimate importance, and their nonobservance comes at a steep
price:
Instead of voluntary cooperative movement you can get an illusion of cooperative
development and growth, an example of which is the distorted Soviet cooperation. That
illusory cooperation was also meant to deceive the public opinion and cooperators in other
countries, where Soviet cooperation was perceived as the real one
Formal application of ICA principles, while ignoring the social and economics characteristics
of a cooperative, leads to considerable disbalance between the form and character of a
cooperative
Among the obstacles on the way of new and diverse cooperatives development in rural Russia
lack of social capital and lack of corresponding trust are of great importance
This is why educating and bringing up of “cooperative people” is the key to upholding the
cooperative identity
Such cooperators believe in joint efforts and work for the common good and because of this
they consciously apply cooperative principle and methods of joint work
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17.

SELECTED THEMATIC BLIOGRAPHY OF AUTHORS
COOPERATION: ECONOMIC RESEARCH IN THE RUSSIAN ABROAD Sobolev A.V. Moscow, 2021. (2nd edition)
I.V. YEMELYANOV: THE FORMULA OF THE COOPERATIVE AGRICULTURAL MOVEMENT Sobolev A.V.,
Pakhomov V.M. On the 140th anniversary of his birth / Yaroslavl-Moscow, 2020
I.V. EMELYANOV: THE ECONOMIC NATURE OF COOPERATIVE ORGANIZATIONS Sobolev A.V., Pakhomov V.M.
Monograph. On the 140th anniversary of his birth / Yaroslavl-Moscow, 2020.
AGRICULTURAL COOPERATIVES: INSTITUTIONAL AND REGIONAL IMPLICATIONS Sobolev A.V., Pakhomov
V.M., Rykalin A.S. Fundamental and applied research studies of the economics cooperative sector. 2020. No. 1. pp. 90-10.
AGRICULTURAL COOPERATION AND REGIONAL DISTRIBUTION Sobolev A.V., Khidirova S.I. Fundamental and
applied research studies of the economics cooperative sector. 2020. No. 4. pp. 68-78.
COOPERATIVE MOVEMENT IN RUSSIA: A CENTURY LATER Sobolev A.V. Fundamental and applied research
studies of the economics cooperative sector. 2019. NO. 2. pp. 17-25.
HOMOGENEITY AND RESTRICTIONS AS FACTORS OF DEVELOPMENT OF RURAL COOPERATIVES IN
RUSSIA Sobolev A.V., Pakhomov V.M. Fundamental and applied research studies of the economics cooperative sector.
2019. No. 5. pp. 18-26.
COOPERATION IN RURAL RUSSIA: PAST, PRESENT AND FUTURE Sobolev A., Kurakin A., Pakhomov V., Trotsuk I.
Universe of Russia. Sociology. Ethnology. 2018. Т. 27. № 1. pp. 65-89.
TO THE QUESTION ABOUT ANNIVERSARIES OF RUSSIAN COOPERATION Sobolev A.V. In the collection:
Cooperation. Pages of history. Moscow, 2002. pp. 5-11.
THE NOBLE PENAL SERVITUDE AND ITS ARTEL ECONOMY Sobolev A.V. VOPROSY ISTORII. 2000. No. 2. pp.
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127-135.

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Thank you for your attention!!!
Sincerely, Alexander Sobolev,
Vladimir Pakhomov, Svetlana Khidirova,
Bogdan Pakhomov
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