From crisis to co-operation

From crisis to co-operation

Co-operatives are often the children of crisis, writes Fr Dermot McKenna

The United Nations (UN) has declared this coming year, 2012, the Year of the Co-operatives. This is a very exciting development for all those involved in the co-op movement.

Despite the fact that co-operatives are widespread in many countries of the world, they tend not to have a very dynamic image in Ireland. This is shown by the fact that the Government gives little support to co-ops while there is strong support for every other form of business enterprise. For example, to further their policy the UN early this year asked that each country should set up an office where all information concerning co-ops could be centred and co-ordinated with a view to action.

But, so far, the Government has failed to respond to the appeal.

Co-operatives exist in every area of human activity and are very numerous worldwide. There are 30,000 co-operatives in Europe alone.

The European Union (EU) introduced a 10-year plan in the 1990s to increase the number of co-ops, especially in the new countries, which had escaped from behind the Iron Curtain.

The best hard evidence we have on world figures for co-ops comes from the central body for co-ops, the International Co-Operative Alliance (ICA), based in Geneva, Switzerland. In 2002, it counted 725 million people involved in co-operatives worldwide. And this is a conservative estimate because not all co-ops are registered with the ICA.


Co-operatives are often the children of crisis. This is the case of probably the most famous co-op in the world – the Mondragon Co-Op in the Basque country in Spain. In the Spanish civil war, the Basques fought against General Francisco Franco and he took a terrible revenge against them. His troops overran their country, bombed their towns, executed many of their leaders and destroyed their industry. Many Basques were forced into exile.

A young Basque priest, Fr José María Arizmendiarrieta, who fought against the Spaniards was imprisoned and narrowly escaped execution.

When the war was over he became a curate in the town of Mondragon. He had been a close student of the social encyclicals of the Church and believed in their principles. He started a trade school for the unemployed young people of the town and gave them a strong technical training.

He taught them that they should share in the ownership, the management and the profits of any industry in which they worked as the encyclicals recommended.

A group of these young apprentices got employment in a local firm but when they were refused a share in the management left and started up on their own. The rest is history.

The Mondragon Co-Op is now the seventh largest industrial group in Spain and the largest in the Basque country. At the end of 2009, it was providing employment for 85,000 people working in 256 related companies organised as co-operatives.

The Mondragon co-operatives operate in accordance with a business model based on people and the sovereignty of labour rather than capital.

In Ireland, our major co-operatives also originated in times of crisis. Around 1890, the British government under William Gladstone decided to return the land to the Irish tenants. The new Irish land owners had no idea of how to farm.

An Irish landlord, Sir Horace Plunkett, who had knowledge of co-ops decided that they were the answer to the problem. Assisted by a Jesuit priest, Fr Tom Finlay, who had seen co-ops at work in Germany during a stay there, he started a campaign to develop farmers’ co-ops. After a great deal of initial difficulty, the co-ops took off. They are now of course a major influence in the Irish economy.

The other major development of co-operatives in this country is, of course, the credit unions.

There was a great economic crisis in Ireland during the 1950s, with unemployment and emigration going up drastically year by year. A famous book was written called The Vanishing Irish. There was a call for a return to the Commonwealth. Groups of people began meeting together to consider whether there was a way out of the crisis.

In May 1957, a Folk School on the Danish model was organised at Red Island Holiday Camp at Skerries in north county Dublin, which was attended by about 500 people and opened by then Taoiseach Éamon de Valera.

It was addressed by a primary school teacher from Cork who was based in Dublin, Nora Herlihy.


Nora, whose biography has been written, is generally regarded as the founder of the Credit Union movement though she was only one of a dedicated group who shared the same goals. She kept up an intensive correspondence with Credit Union experts in Canada and the United States, until she had mastered the theory and practice of the movement.

As she stood beside de Valera as he signed into law the Credit Union Act 1966, Nora Herlihy must have been proud of the efforts of herself and the other pioneers.

The Credit Union movement spread rapidly through the country. It spread also through the North following the foundation of the first credit union in the region in the 1960s. This was in the Bogside in Derry under the leadership of John Hume. The movement spread to Armagh and throughout under his leadership.

He became the second President of the Irish League of Credit Unions (ICLU), international vice president of the movement and later leader of the Social Democratic and Labour Party (SDLP).

There are now over 600 credit unions in Ireland with over two million members.

In the middle of the present great economic crisis there is another co-operative development which could if strongly supported help towards the solution of the problem of unemployment and especially the cynicism about the possibility of creating jobs.

We will talk about this in another article in the New Year.