The Cooperative Idea as an Institutionalization of Adam Smith’s Moral Philosophy

This dissertation explores the cooperative idea as defined by Hermann Schulze-Delitzsch and Friedrich Wilhelm Raiffeisen and the moral philosophy of Adam Smith. Recently – and perhaps more than ever before – people are realising that cooperatives play a special role in society. Citing reasons for the success of cooperatives, many people refer to the principles innate to such cooperatives. Whilst other business models commonly pursue the goal of maximising profits, cooperatives focus on benefitting members. In a cooperative, members are not only customers, but also the owners. Building on a basis of solidarity and self-help, they form subsidiary, democratic structures, often with regional roots. However, even though cooperative principles are frequently regarded as a decisive distinguishing feature, it seems that many people consider the cooperative idea to be antiquated and outdated. Building on Adam Smith’s understanding of the economy, this paper seeks to explore why cooperatives are so successful. Adam Smith is often regarded as the founder of the modern economic system, which seeks to maximise profits in line with “homo economicus”. Hence in this context, he may seem a surprising point of reference. This paper, however, is not based on the distorted interpretation of Smith’s work described above. Instead, it follows contemporary research, which places a stronger focus on the moral philosophy delineated by Smith in his book “The Theory of Moral Sentiments” – a perspective that clearly shows how vital it is to interpret his book “The Wealth of Nations” in this same context. The focus is on German cooperative banks, which serve as a sounding board as we raise questions about the strategic direction of cooperatives.