Rochdale Principles
Based on Wikipedia: Rochdale Principles
The Weavers Who Changed Everything
In 1844, twenty-eight textile workers in a small English mill town did something that would reshape global economics for the next two centuries. They weren't economists or philosophers. They were flannel weavers—people who worked looms for a living, their hands rough from thread and their lungs thick with cotton dust.
They were also hungry.
The industrial revolution had made factory owners rich, but the workers who powered those factories could barely afford to eat. Food was expensive, often adulterated with sawdust or chalk to stretch profits. Credit schemes trapped workers in cycles of debt. The systems that were supposed to serve them had become systems that exploited them.
So these twenty-eight weavers decided to serve themselves. They pooled their meager savings—just one pound each—and opened a tiny shop on Toad Lane in Rochdale, England. They called themselves the Rochdale Society of Equitable Pioneers.
That shop, and the principles they created to run it, would become the foundation for every cooperative enterprise on Earth.
What Makes a Cooperative Different
To understand why the Rochdale Principles matter, you first need to understand what a cooperative actually is—and what it isn't.
A traditional business exists to generate profits for its owners. Shareholders invest money, the company makes decisions to maximize returns, and the profits flow upward to those shareholders. The customers are a means to an end. The workers are a resource to be managed.
A cooperative flips this entirely.
In a cooperative, the people who use the business own the business. If it's a grocery cooperative, the shoppers are the owners. If it's a housing cooperative, the residents are the owners. If it's a worker cooperative, the employees are the owners. There's no separate class of investors extracting value from the enterprise.
This isn't just a feel-good distinction. It fundamentally changes how decisions get made. A traditional grocery store might stock whatever products generate the highest profit margins, even if those products are unhealthy or overpriced. A grocery cooperative, owned by its shoppers, is more likely to stock what those shoppers actually want and need—because the decision-makers and the customers are the same people.
But here's the challenge: how do you actually run an organization like this? How do you prevent a cooperative from devolving into chaos, or being captured by a small group of insiders, or abandoning its mission in pursuit of short-term gains?
The Rochdale weavers figured this out. And their answers have proven remarkably durable.
The Seven Principles
The modern version of the Rochdale Principles, as adopted by the International Cooperative Alliance in 1995, contains seven core ideas. Each one addresses a specific failure mode that could destroy a cooperative's mission.
Open and Voluntary Membership
The first principle is deceptively simple: anyone who can use the cooperative's services and is willing to accept the responsibilities of membership should be allowed to join. No discrimination based on gender, race, religion, politics, or social class.
This matters because cooperatives are supposed to serve their communities. The moment you start excluding people—even for seemingly reasonable reasons—you start creating the same kind of extractive dynamics that cooperatives were designed to escape. The insiders benefit at the expense of the outsiders.
Now, this doesn't mean cooperatives can't have any membership criteria. A housing cooperative in Brooklyn can require that members actually live in Brooklyn. An agricultural cooperative can require that members actually be farmers. A credit union can require that members share some common bond, like working for the same employer or living in the same region.
The point is that the criteria must be relevant to the cooperative's purpose—not pretexts for keeping certain kinds of people out.
Voluntary participation is equally important. Nobody should be forced to join a cooperative. This might seem obvious, but throughout history, various regimes have created mandatory "cooperatives" that were really just state-controlled enterprises with a friendlier label. The Soviet Union was particularly fond of this trick. If participation isn't genuinely voluntary, the whole democratic structure becomes meaningless.
Democratic Member Control
The second principle is the heart of cooperative identity: one member, one vote.
This is radically different from how traditional corporations work. In a typical company, voting power is proportional to investment. If you own ten percent of the shares, you get ten percent of the votes. This means wealthy investors can accumulate enough shares to control companies they've never set foot in, making decisions that affect workers and customers they'll never meet.
Cooperatives reject this entirely. It doesn't matter if you've been a member for thirty years or three months. It doesn't matter if you do a million dollars of business with the cooperative or a hundred dollars. You get one vote, same as everyone else.
This creates genuine accountability. The elected representatives of a cooperative—its board of directors, its officers—answer to the full membership. They can be voted out. Their decisions can be overturned. The power flows from the bottom up, not the top down.
Large cooperatives with millions of members obviously can't have everyone vote on every decision. So they develop representative structures, with local chapters electing delegates to regional bodies, and regional bodies electing delegates to national or international governance. But the principle remains: power ultimately derives from the membership, exercised democratically.
Member Economic Participation
The third principle addresses money—specifically, who contributes it and where it goes.
Members are expected to contribute capital to their cooperative. This might be a one-time membership fee, regular dues, or retained earnings from transactions. The key insight is that at least part of this capital becomes the common property of the cooperative itself, not the personal property of individual members.
This creates what economists call "indivisible reserves"—assets that belong to the cooperative as an institution and can't be divided up among members. When members leave, they don't get to take a chunk of the building or the equipment or the brand value. This ensures the cooperative can serve future members, not just current ones.
What about profits? Cooperatives typically call them "surpluses" instead, which reflects a different philosophy. In a traditional business, profit is the goal. In a cooperative, surplus is what's left over after serving members—and it should be reinvested in that mission.
Surpluses can go several places. They can be reinvested in the cooperative's operations. They can be distributed to members based on how much they actually used the cooperative—so a member who bought a thousand dollars of groceries gets a bigger dividend than one who bought a hundred dollars. They can support educational programs or community initiatives.
One thing surpluses generally don't do: generate unlimited returns for investors. If cooperatives pay any return on member capital, it's typically limited to a modest rate. This prevents the cooperative from being captured by people who see it primarily as an investment vehicle rather than a service.
Autonomy and Independence
The fourth principle is about keeping the cooperative free from outside control.
This might seem like it conflicts with practical reality. Cooperatives often need to borrow money from banks, partner with government programs, or enter contracts with other organizations. How can they remain "autonomous" while doing all of this?
The answer is that autonomy means making sure any external relationship preserves democratic member control. A cooperative can take a loan from a bank—but the loan terms shouldn't give the bank power over how the cooperative operates. A cooperative can participate in a government program—but it shouldn't become dependent on that program in ways that compromise its independence.
This principle exists because of bitter historical experience. Cooperatives that become too dependent on government support often find themselves doing what the government wants rather than what their members want. Cooperatives that take investment capital with strings attached often find those strings pulling them away from their cooperative identity.
The most dangerous moment is often when a cooperative is struggling. An outside investor offers to rescue it—but only if the cooperative abandons one-member-one-vote governance, or sells off its indivisible reserves, or transforms into a traditional corporation. The fourth principle says: don't make that deal. Find another way, or go down fighting.
Education, Training, and Information
The fifth principle might surprise people. What does education have to do with running a business?
Everything, it turns out.
Democratic governance only works if the people doing the governing are informed. Members who don't understand the cooperative's finances, operations, or principles can't make good decisions about its future. Elected representatives who lack management skills can't provide effective oversight. Employees who don't grasp the cooperative difference might run the organization like a traditional business, undermining its mission.
So cooperatives commit to education at every level. They train their members to understand how the cooperative works and why it works that way. They train their leaders to govern effectively. They train their staff to embody cooperative values.
But education doesn't stop at the membership. Cooperatives also commit to informing the general public—particularly young people and opinion leaders—about what cooperatives are and why they matter. This is partly missionary work, spreading the cooperative gospel. But it's also practical: cooperatives need public understanding to operate in a world that often doesn't know they exist.
Think about how many people have never heard of the Rochdale Principles. How many assume that every business must have shareholders extracting profits. How many don't realize there's an alternative model that's been operating successfully for nearly two centuries. Cooperative education fights this invisibility.
Cooperation Among Cooperatives
The sixth principle is perhaps the most distinctive: cooperatives should work together.
Traditional businesses see each other primarily as competitors. Even when they collaborate—in trade associations, standards bodies, or joint ventures—there's always an underlying tension. Your gain might be my loss.
Cooperatives take a fundamentally different view. The cooperative movement sees itself as just that—a movement, with shared values and shared interests. A credit union in California and a housing cooperative in New York and a worker-owned factory in Ohio are all part of something larger than themselves.
This manifests in practical ways. Cooperatives form federations and associations at local, national, regional, and international levels. They share best practices and training resources. They support each other during crises. They advocate together for policies that help the cooperative sector.
The International Cooperative Alliance itself is an expression of this principle—a global body representing cooperative movements in over 100 countries, with roots going back to 1895. When the ICA updates the Rochdale Principles, it's cooperatives cooperating to define what cooperation means.
Concern for Community
The seventh and final principle extends the cooperative's responsibility beyond its own membership: cooperatives should work for the sustainable development of their communities.
This principle was added relatively recently, in the 1995 revision. It reflects a growing recognition that cooperatives don't exist in isolation. They're embedded in communities—physical neighborhoods, economic ecosystems, social networks. What happens to those communities affects the cooperative, and what the cooperative does affects those communities.
Sustainability is key here. Short-term thinking might maximize returns for current members but damage the community that future members will inhabit. A fishing cooperative that depletes the fishery, a housing cooperative that drives out long-term residents through speculation, an agricultural cooperative that exhausts the soil—all of these might show good numbers in the short term while destroying their own foundations.
Concern for community also means that cooperatives aren't just about serving members. They're about building the kind of world where people can flourish. This connects to education, to cooperation among cooperatives, to the whole vision of an economy organized around human needs rather than capital accumulation.
How the Principles Evolved
The principles we just explored aren't exactly what those twenty-eight weavers wrote down in 1844. They've evolved over a century and a half of debate, revision, and practical experience.
The original Rochdale Pioneers had their own list, developed through trial and error as they figured out how to run their shop. Some of their principles made it into the modern version largely unchanged. Others have been dropped or transformed.
For instance, the original principles included "cash trading"—no credit extended. In 1844, this was crucial. Working-class people were being destroyed by debt, trapped in cycles where they owed more to the company store than they could ever repay. The Rochdale shop's insistence on cash transactions protected its members from this exploitation.
But by the late twentieth century, credit itself had become less predatory (or at least differently predatory), and many cooperatives found they needed to offer credit to serve their members effectively. So the cash trading principle didn't make it into the 1995 revision.
Similarly, the original principles included explicit "political and religious neutrality." The Pioneers operated in a deeply divided society where religious and political affiliations could tear communities apart. Their cooperative was supposed to be a place where everyone could participate regardless of whether they were Anglican or Methodist, Tory or Whig.
The modern version folds this into the first principle's prohibition on discrimination, rather than listing it separately. The spirit remains—cooperatives shouldn't be captured by any particular political or religious faction—but the specific language has changed.
The 1966 revision, developed by a commission with representatives from five continents, tried to distill the principles to their essence. They identified six core elements: open voluntary membership, democratic governance, limited return on equity, surplus belonging to members, education of members and public, and cooperation between cooperatives.
The 1995 revision, part of a broader "Statement on the Cooperative Identity," expanded this back to seven principles and tried to capture what cooperatives had learned from operating in increasingly complex global environments. The addition of "concern for community" reflected growing awareness of sustainability and social responsibility.
The Global Cooperative Movement Today
The ideas that emerged from that small shop on Toad Lane now animate a global movement of staggering scale.
The International Cooperative Alliance represents cooperative organizations in 109 countries. Its members, taken together, include more than one billion individual cooperative members worldwide. That's one in eight people on Earth.
The cooperative form has proven remarkably adaptable. Agricultural cooperatives help farmers pool resources and access markets they couldn't reach individually—from rice growers in India to dairy farmers in Wisconsin. Credit unions provide financial services to people traditional banks won't serve. Worker cooperatives give employees ownership stakes in their own labor. Housing cooperatives offer alternatives to both traditional homeownership and exploitative rental markets. Consumer cooperatives run grocery stores, pharmacies, funeral homes, and electric utilities.
Some cooperatives are tiny—a dozen workers sharing ownership of a cafe. Others are enormous. The Mondragon Corporation in Spain's Basque Country employs over 80,000 worker-owners across hundreds of businesses, making it one of the largest business groups in the country. REI, the outdoor recreation retailer, is a consumer cooperative with more than 20 million members and over $3 billion in annual revenue.
In some countries, cooperatives are central to the economy. In Finland, cooperatives account for more than ten percent of gross domestic product. In Kenya, cooperatives handle nearly half of all agricultural production. In Quebec, the Desjardins Group—a federation of credit unions—is the largest employer in the province.
And yet cooperatives remain oddly invisible in mainstream economic discourse. Business schools teach corporate finance and management with almost no attention to cooperative alternatives. Economic textbooks model firms as profit-maximizing entities owned by shareholders, barely mentioning that other forms exist. Policy debates about housing, healthcare, banking, and employment rarely consider cooperative solutions.
This invisibility is itself a kind of failure—a failure of the fifth principle, education. The cooperative movement has built something remarkable, but it hasn't always succeeded in telling its own story.
Why This Matters for Housing
The connection between the Rochdale Principles and housing might not be immediately obvious. The original Pioneers ran a grocery shop, not an apartment building.
But the same dynamics that made industrial-era food systems exploitative make twenty-first-century housing systems exploitative. In both cases, people need something essential—food then, shelter now—and traditional market structures allow those with capital to extract value from those without it.
Housing cooperatives apply the Rochdale Principles to this problem. Instead of a landlord extracting rent from tenants, the residents own and control their housing collectively. Instead of housing being treated as an investment vehicle for outside capital, it's treated as a service for the people who live there.
The first principle means that housing cooperatives should be open to anyone who needs housing and is willing to participate in cooperative governance. The second principle means residents make decisions democratically—about maintenance, about rules, about how to allocate shared resources. The third principle means that housing costs should reflect actual expenses, not whatever the market will bear, and any surplus should benefit the residents.
The fourth principle means that housing cooperatives should resist being bought out by private developers or captured by government programs with strings attached. The fifth principle means residents should be educated about housing markets, cooperative governance, and their rights and responsibilities. The sixth principle means housing cooperatives should work together, sharing resources and advocating for policies that support cooperative housing. The seventh principle means housing cooperatives should strengthen their communities, not extract value from them.
Some of the most successful housing cooperatives in the world—like Rochdale Village in Queens, New York, named explicitly after the original Pioneers—demonstrate what's possible when these principles are applied consistently over decades.
The Continuing Experiment
Nearly two centuries after those twenty-eight weavers opened their shop, the experiment they started is still running.
It's not a utopian experiment. Cooperatives fail. They get captured by insiders. They lose sight of their principles. They succumb to competitive pressure from traditional businesses. They make mistakes.
But they also succeed, often in ways that conventional economic theory says shouldn't work. They provide goods and services at fair prices. They treat workers with dignity. They build wealth in communities rather than extracting it. They demonstrate that economic activity can be organized around human needs rather than capital accumulation.
The Rochdale Principles aren't a magic formula. They're a set of hard-won insights about how to make democratic ownership work—how to prevent the failure modes that destroy cooperative enterprises, how to maintain accountability and mission focus across generations, how to balance the needs of current members against obligations to future ones and to the broader community.
Every cooperative that follows these principles is running its own version of the experiment. Every time one succeeds, it proves that alternatives are possible. Every time one fails, it teaches lessons that strengthen the movement.
Those twenty-eight weavers couldn't have imagined a billion people around the world participating in cooperative enterprises. They were just trying to buy unadulterated flour at a fair price. But the principles they developed to solve their small problem turned out to scale remarkably well.
The questions they asked—who should own an enterprise, who should control it, who should benefit from it—are still the most important questions in economics. Their answers still challenge us to imagine a different kind of economy.