Midterm Study Guide
Midterm Study Guide ECON 105
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Date Created: 03/08/15
Midterm Exam Study Guide Intro to Political Economy Exam March 12 2015 Week 1 What is a Coop 1 What are two commonly used definitions of cooperatives according to Cropp and Zeuli from the ICA and the USDA respectively According to the International Cooperative Alliance a cooperative is an autonomous association of persons united voluntarily to meet their common economic social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise Additionally the USDA defines a cooperative as a userowned usercontrolled business that distributes benefits on the basis of use 2 When and where were the earliest cooperative associations of this kind formed According the Cropp and Zeuli the earliest cooperative associations were created in Europe and North America during the 17th and 18th centuries One such precursor to co operatives was the Rochdale Society in England in the 19th century who are considered to have contributed the guiding set of principles that helped foster cooperative business development Other key concepts coops are member owned member controlled one member one vote a user s contribution of capital should be in equal proportion of each member s use patronage of the coop ICA stands for International Cooperative Alliance Week 2 Is the Economy Working for You 1 Why did the National Tax Equality Assocation see coops as a threat and begin to attack them Business for coop production started to take off for a variety of goods including hardware feed grain petroleum and others When a newspaper story was published featuring Lincoln as a prominent coop leader and the face of this moment the NTEA was threatened by their emergence as competition feeling jilted that the coops were so successful and still paid less income taxes than profit corporations This is because coops refund their net earnings to their customers which profit corporations could also do evening out their tax rates However the NTEA twisted this into the statement that coops don t pay taxes attempting to sabotage their success 2 According to this week s Restakis reading what is meant by free market and what is the best approach to managing the economy based on a free market ideology Free market is a term which means a market in which prices increase or decrease based on consumer demand and in which government does not intervene According to Restakis markets have never truly been free and the laissezfaire doctrinehas been all but abandoned by most respected economists He writes that the free market systemas it is has been able to survive only because the state has been there to support it and to salvage it Restakis is justifying the 2008 economic bailout saying that without government intervention the free market would not have been able to recover on its own 3 According to Restakis what is the current and historic relationship between free market liberalism and democracy Restakis cites that the role of the state in sustaining the free market is constant and pervasive and has been so for well over a century meaning that without government intervention the notion of the free market would not have persisted so long Furthermore he asserts that capitalism is neither synonymous with the market nor is it the source of free and democratic societies both historically and currently The notion of democracy significantly preceded that of capitalism and their ability to function together and apart demonstrate their compatibility rather than their similarity Week 3 Early Cooperative History and Philosophy 1 When and where did the modern cooperative movement begin and what group of cooperators is credited as the founders of the cooperative movement The first cooperative groups were created in Europe and North America during the 17th and 18th centuries and are considered precursors to modern cooperatives Cropp amp Zeuli 5 2 Prior to the industrial revolution in England and other parts of Europe how did most families make a living Before the Industrial Revolution began in the mid to late18th century families in Europe were selfsufficient operating on a system of subsistence and producing only enough goods and food for themselves and for minimal trading Cropp amp Zeuli 9 3 How did the enclosure of land and industrial development shape the history of the modern cooperative movement What were the conditions faced by people during the mid 18th and 19th centuries The modern cooperative movement was created in times and places of economic distress and social upheaval at the crux of revolutions in the industrial and agricultural sectors of the European economy Cropp amp Zeuli 9 Between the years 1760 and 1843 roughly seven million acres of agricultural land in England were enclosed into estates driving a large number of farmers and members of these rural communities into cities in search of jobs 9 However employment opportunities were scarce and social conditions began to degrade Without any established public assistance people began to form selfhelp or friendly organizations seeking to lessen the public burden and morphing into cooperative or quasicooperative businesses in England by 1760 10 4 According to Cropp and Zeuli what were some of the first cooperative or quasi cooperative businesses in England The first cooperative or quasicooperative businesses in England were flour milling and baking industries beginning in around 1760 Cropp amp Zeuli 10 5 Who was Robert Owen and for what is he famous Robert Owen was a wellknown Utopian Socialist from England who sought to improve communities by attempting to create utopian conditions in society 10 His goal was to alleviate the suffering caused by the Industrial Revolution and to improve Europeans quality of life As such he supported early cooperatives though he was more interested in their ideology believing that they were the best medicine for the ills of society but outright refusing to participate in their development and formation 11 He is often called the father of cooperation 11 6 Who was Charles Fourier and for what is he famous Charles Fourier was a French social philosopher and member of the bourgeoisie Cropp amp Zeuli 10 Like Owen he believed that the working class was being dehumanized and repressed and worked for social reforms to improve living conditions Fourier and Owen both believed that communities should live on small plots of land and adhere to very specific guidelines to create a utopian society and during his lifetime four of these communities were founded though they ultimately failed 11 7 Who was William King How did King s ideas differ from Owen s and Fourier s and for what is he known to be responsible See Cropp and Zueli 78 and Birchall 2330 William King was a social reformer from England like Robert Owen who worked as a physician and worked to motivate and develop consumer cooperatives across England During his lifetime he published 28 issues of a selfproduced magazine called The Cooperator which featured information and instruction about cooperating and was widely distributed throughout the country Cropp amp Zeuli 11 King s ideas different from Owen s and Fourier s in that he was a religious fundamentalist and believed that scripture should guide ethics and morals of cooperation 11 As such he did not outwardly disagree with their model of selfsustaining cooperative communities on small plots of land but he believed that they should be funded with the members own capital and restricted to Christians only 11 8 Who were the Rochdale Pioneers Who influenced them and what were some of their ultimate goals What are they known for and why are they famous today The Rochdale Society in 19thcentury England is considered to have begun the modern cooperative movement born out of a period of social change in Europe in terms of agricultural and industrial production James Smithies one of the original organizers founded the group in 1833 with a group of pioneers whose goals were to sell provisions at a store to purchase homes for their members to manufacture goods their members needed and to provide employment for their members who were either out of work or poorly paid 12 The small group of 28 pioneers became activists for social reform and completed the prototype cooperative model for a shop on Toad Lane in Rochdale England in 1844 over a decade later 12 9 What was the first cooperative law When was it passed and why was it important The first cooperative law was the Industrial and Provident Societies Act passed in England in 1852 Cropp amp Zeuli 13 This law provided legal protections for the co operatives such as protecting their property giving binding legal authority to their rules and safeguarding their investors money and also imposed operation regulations such as a share limit of 100 euros per user 13 10 When where and under what conditions were the first cooperative credit associations developed The first cooperative credit associations were founded in the 1840s during a period of famine and economic hardship in Europe Cropp amp Zeuli 14 FW Raffeisen a mayor of a village in Northern Germany founded a cooperative society to provide food such as potatoes and bread to those who were willing to work advocating selfhelp and seeking to transfer money from there icy to the poor 14 The cooperative organized into a cooperative loan society in 1862 and other societies in Germany began to organize after their example 11 According to Thompson what are the three events of 1844 that heralded major economic change and what are the three economic models which have dominated the world for the past 150 years The first of three major events of 1844 that lead to major economic change was the passing of the Joint Stock Act in British Parliament serving as the birth of modern capitalism and laying a foundation for the modern stock corporation 2 The second event was the publication of Karl Marx s The German Ideology which established the philosophy of Communism 2 Thirdly in 1844 the Rochdale Equitable Pioneers Society the first cooperative was founded 3 The three economic models which have dominated the world are modern capitalism Communism and the modern cooperative movement 12 What were some of the factors that provoked the upheaval in the early 1800 s England especially in Rochdale as described by Thompson in Chapter 1 The Industrial Revolution spurred the formation of modern cooperation in Rochdale largely due to the effect such an economic shift had on society Conditions such as unemployment near starvationdiseaseepidemics and child labor all were side effects facing the working class in an industrial community leading some to seek an alternative path 4 13 What explanations does Birchall offer for the failure of the first cooperative movement One explanation is that the members of the first cooperative movement were frustrated with its stagnation after being snubbed in the 1832 Reform Act and left the movement to find a better way Birchall 30 This meant that coops not only lacked legal status but they could not rent or own property in their own right but had to do it as individuals and the capital of the society belonged legally to no one 31 Another explanation is that as the economy began to sink into a repression economic reform movements began to collapse as well 31 Week 4 Growth and Development 1 According to Birchall what percentage of people lived off the land in the beginning of the 19th century in Britain How did the population distribution change by the end of the century and how did production change during that same period Approximately 80 percent of the population lived on the land at the start of the 19th century and by the end of the century roughly the same percentage were living in large towns and cities Birchall 1 Production changed in that while it was done in small workshops and in people s homes at the start of the century it eventually shifted to being concentrated in large factories 1 2 What kinds of customary rights were stripped away from working people with the development of modern society The customary rights taken from the working class were rights such as to gate firewood and to hunt gameto have their wages set by a magistrateto poor relief if they were unemployed or laid off from agricultural work in the winter and so on Birchall 2 3 What were the eight famous principles of the Rochdale Pioneers The eight principles of the Rochdale Pioneers were democratic control meaning one member one vote open membership anyone could become a member if they paid a small down payment fixed and limited interest on capital distribution of the surplus as dividend on purchases cash trading a commitment to providing only pure and unadulterated goods a commitment to education and political and religious neutrality Birchall 7 4 Which country led the way in the invention of the credit cooperative What needs were met by the establishment of these credit cooperatives The establishment of the credit cooperative came from Germany during the 19th century meeting the needs of both small farmers and those of artisans and business owners in their respective geographic areas Birchall 11 5 What are the three basic forms of agricultural cooperation as described by Birchall see p 14 The three forms of agricultural cooperation are the supply coop which organizes the inputs of seeds fertilizer and livestock the marketing coop which organizes the distribution and sale of produce and the production co op which refines products to a higher value product ready for human consumption Birchall 14 6 What is the principle of federation described by Birchall at the beginning of Chapter 2 and what were the two major types of federation The principle of federation suggested that cooperatives did not need to sacrifice autonomy for cooperation stating that their members only needed to give up as much sovereignty as was needed in order to meet common goals Birchall 35 Two major types of federation formed from this principle wholesale societies such as national banks and cooperative unions 36 7 What were the values and principles established by the ICA in 1995 The principles established by the ICA in 1995 were voluntary and open membership democratic member control one member one vote member economic participation autonomy and independence education training and information cooperation among cooperatives and concern for the community Birchall 6570 Week 5 Cooperative Sectors and Industries Refer to your notes on a cooperative pair for this week What sector did each cooperative belong to How are they similar or different Week 6 Global Development Refer to your notes on either Cooperation in Europe Asia amp the Pacific Rim Africa or the Americas for this week Here are my notes on Cooperation in Europe 1 What have been the most important 23 influences cultural economic political etc that shaped the cooperative movement in the regions you chose Two of the most important factors that shaped the development of co operation in Europe are economic conditions and governmental and political shifts For example the wartime economy in Europe was favorable due to an increase in production leading to success for European coops Additionally the emergence of both capitalism and communism influenced cooperation in Europe by dividing the population based on allegiances and ideologies 2 What have been some of the obstacles to the growth and development of the movement in your regions One of the obstacles to cooperation in Europe was the unstable infrastructure of various countries throughout the 19th and 20th centuries such as the case of Germany Because of political turmoil government takeovers and political uprisings the instability throughout Europe challenged the success of co operative function and growth 3 Was a particular coop sector or industry more successful or dominant in the regions you studied Why was this Agricultural coops were most common and most successful in Europe due to their agriculturally based economy 4 What was the most compelling example of how coops have contributed to the social and economic development of your regions Several successful cooperatives have emerged from Europe over time but perhaps the most compelling example is Mondragon a consumer co operative group based in the Basque region of Spain which has developed in recent years to become a multibillion dollar corporation and one of the largest and most successful cooperatives in Europe Week 7 Cooperative Economies 1 What is an economy according to Pobihuschy Pobihuschy defines an economy as a set of arrangements in society or the world for the ownership production distribution and use of goods and services Pobihuschy 3 2 According to Pobihuschy what is the main difference between a global corporate market or capitalist economy and a cooperative economy Pobihuschy differentiates a global corporate market economy and a co operative economy by stating that the two have different sets of values Specifically he states that while a cooperative economy exists to serve the people all people in respect of nature a global corporate market economy serves the interest of the few who own capital Pobihuschy 34 3 Why are the cooperative complexes of Mondragon and Italy significant to discussions regarding the relevance of cooperative enterprise to contemporary economic issues The cooperative complexes such as those in Italy and Spain s Mondragon are significant to the relevance of cooperative enterprise in contemporary economic issues in that they are cooperatives which have achieved unparalleled success operating outside of the traditional capitalist business model 4 What is the Mondragon Cooperative Corporation and where is it located Mondragon Cooperative Corporation located in the northern Basque region of Spain is Spain s seventhlargest industrial group with interests ranging from supermarkets and finance to white goods and car parts Economist 1 5 According to Wolff how has the success of MCC compared to the rest of Spain s economy and why does he think that s important Wolff writes that MC displays a commitment to job security unheard of in capitalist enterprises creating a system to move workers within the company to enterprises needing more workers Wolff 3 He also states that nearly half of MC s members are women whose equal powers with male members likewise influence gender relations in society diffently than capitalist enterprises 3 At the end of the article Wolff states that the success of MC is important given the performance of Spanish capitalism in recent years leading to conditions such as 25 unemployment a broken banking system and governmentimposed austerity 3
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