The Partnership

§14 THE RULES

14.1 We had heard so much about ‘the Rules’ that we decided to attend a lecture by The Partnership’s solicitor on the subject.

14.2 "This is going to be a long and boring exercise being lectured on dry-as-dust rules. I wonder if I’ll fall asleep and be an embarrassment," I thought on the way to the lecture theatre.

14.3 With these thoughts still running through my mind, I took my seat and prepared to pay attention. To my surprise, the solicitor didn’t have a flat, monotone voice, and his opening remarks were rather stimulating. "Ladies and gentlemen, thank you for your interest as evidenced by your attendance. This lecture is for new partners, and for those who wish to bring their knowledge of the Rules up to date."

14.4 "We cannot expect to live harmoniously with our neighbours unless our rights and responsibilities are known and agreed upon. In a close relationship such as a partnership, this is particularly so."

14.5 "The Rules of The Partnership provide a framework within which rudimentary industrial justice accrues to the partners. It is a prior condition of partnership that a proposed partner studies and agrees to abide by the Rules before being admitted into partnership. The partners try not to exploit each other and many of the rules reflect this. Within The Partnership therefore there is a degree of industrial justice that has developed over the decades to which each partner has free recourse. The seeker of justice does not have to purchase it here. Just practice doesn’t just happen; it is based on pre-considered reason. What happens naturally is unjust practice based on the self-interest of people with the power to make rules in their interest. Outside The Partnership, the fact that people work hard and industriously does not necessarily ensure their security or their being accorded industrial justice. For these they must also ensure that their labour is profitably directed and that others do not appropriate the surplus produce of their labour. How can people ensure these things that are usually the prerogatives of remote rich and powerful people? Ultimately only by becoming a partner."

14.6 "Below average people are often pushed below by people above them, but they still have the same needs as everyone else: love, food, clothing, housing, ... - unfortunately they are usually more subject to exploitation. Only in partnership is it in the interests of the strong to protect the weaker partner in an interdependent long-term relationship."

14.7 "Every producer co-operative has to have a registered name. ‘The Partnership’ is ours." The solicitor handed out "The Rules of The Partnership" to each of us, and started with Rule 1.

14.8 "Does this mean," asked a partner, "that if I disagree with a decision taken by The Partnership’s board of directors, that I am still bound by and have to obey that decision? If the decision is about religion or politics or something quite different from the manufacturing sector of The Partnership, does this rule still apply?"

14.9 "The answer to both your questions," replied the solicitor, "is yes. Decisions by the board on matters of religion or politics or any other subject are not differentiated from decisions in other sectors. If you wish to remain a partner, you are bound to co-operate in executing the board’s decisions even if you disagree with them."

14.10 The solicitor drew our attention to Rules 2.2-2.4.

14.11 "Why don’t you contract work out and hire labour as you see fit?" asked a visitor in a challenging tone. The visitor coaxed, "Surely it is reasonable to send out the dirty jobs that no partner wants to do. Christians shouldn’t hoard work for themselves in these hard times. If you just hired a few people or let a few contracts for the dirtiest and most repetitive jobs, you would be providing a job for one of our unemployed and saving yourselves a lot of unnecessary hard work. Some of the sweatshop prices for component manufacture are so attractive that I think you are foolish not to take them. In the long run you could all retire and live off hired labour and contractors. All that’s stopping you is this rule!"

14.12 The solicitor considered his adversary and measured his words: "A very perceptive, persuasive argument on precisely the point in question," said the solicitor as he prepared The Partnership’s defence. "We’re a Christian enterprise. We’re not about to live off the exploited. We aim to lighten the load of the poor and the oppressed, even if ever so slightly, not to increase it. This is why our founders put this rule in all those years ago, and if you look up the minutes of those early meetings you will see exactly the same arguments raised. The rule may be old, but the partners believe it is still appropriate and have no intention of amending or rescinding it. Anyway, it does none of us any harm to do the menial jobs on a roster basis, and it is a good incentive for us to admit into partnership those who will achieve their potential in menial tasks."

14.13 "Why not put this capital into The Partnership’s liquid reserves?" asked a student. "This would allow The Partnership to undertake capital expenditure on a particular project without having to make a call on the capital resources of the partners."

14.14 "One reason for this requirement," answered the solicitor, "is that it represents a considerable incentive for the existing partners to admit additional partners. Remember that there have to be a lot of incentives before the existing partners will admit into The Partnership additional partners: they have to give up a proportion of the ownership and control and profits, and they expect cash in hand and less work if they take such a decision. Although they have well developed personalities and a life-style that enhances co-operation and suppresses competition, they still respond to conventional motivators."

14.15 "This is a hard rule," commented a partner. "I’m drawing nine times the minimum and in the last recession I found myself with house payments and commitments in proportion to my income, and suddenly that income was drastically cut. I had to make a considerable adjustment downwards in my living standard, and my family didn’t like it. Why not have all salaries reduced on a percentage basis? That would be fairer. In the last recession the lowest paid partners took no reduction in their drawings at all, and the highest paid partners took the full burden of the recession."

14.16 "You adjusted didn’t you?" replied the solicitor firmly. "Poor people simply do not have the resources available to rich people, and this rule reflects that fact. Partners on the minimum drawing need all they get to live - in some partnerships this is the poverty line. We can’t, as Christians, reduce a breadwinner’s earnings below the poverty line except when there just isn’t enough money to pay. In deep depressions the rich partners subsidise The Partnership out of their own pockets. This is in accordance with the direction that those who would be the greatest among us shall be the servants of all, and the rule is firmly based on Matthew 23:11."

14.17 "I have certainly learned my lesson," continued the partner. "I now live on the minimum drawings. It’s not a bad way to live either. I find that I have a much greater personal surplus. I never buy on credit now, and I always buy for cash, usually through The Partnership store at discount prices. I have found an economic freedom that allows me to participate more fully in the wider work of The Partnership."

14.18 "I believe," concluded the solicitor, "that we have adequately covered the reasons for this rule. Shall we proceed? Look at the next rule for capital formation."

14.19 This was the rule I had been waiting for - the rule that allowed the poor into The Partnership. But there was no comment - it was simply accepted.

14.20 Here then was the mechanism for ridding The Partnership of an incompatible or incapable person. It seemed a hard rule and the solicitor commented, "I suppose you think this is a tough rule for Christians to adhere to. But there has to be ways of getting rid of incompetent partners. We’re committed to maintaining a strong, healthy and vibrant enterprise."

14.21 "This seems a rather unusual rule," murmured a visitor. "Yes," replied the solicitor, "it’s often needed because many of the partners have much more than their labour to sell."

14.22 "Before I proceed, I would like to point out that every partner has the same rights, the same degree of control and the same one part as every other partner. Powerful, rich, educated people have always objected to this principle on the grounds that weak, poor, uneducated people do not have the capacity to govern themselves, to see what is in their best interests, or to understand their position. We have found by experience that with adequate training, food, clothing and housing this is not the case. We also found that the people who espoused this view usually had vested interests in keeping these people in a poor and oppressed state; very often it was a case of the rich and powerful maintaining their position as a direct consequence of ‘their’ peoples’ poverty. Living off the poor is still common outside, and it comes in various guises - usually devices that involve the something for nothing principle, such as land speculation, buying cheap and selling dear, or gambling of one sort or another. In some countries there is still the primitive police state with rule by force, terror and torture, but these tactics have mostly been replaced by the more subtle and effective Western practices. I would recommend the chaplain’s lecture on the subject to anyone interested in this line of thought. To keep abreast you should attend his course once every five years or so - the same as is recommended for my course on the Rules."

14.23 "In practice we have found that below average partners may not understand the full technical arguments involved, but they listen to the other partners weighing the arguments for and against and they use the mutual trust between the partners. If there is a divergence of opinion between the partners, and this rarely occurs on matters of policy since all the partners have very similar economic interests, we usually find that the partners who cannot or will not inform themselves on an issue simply take the position of an informed partner that they respect."

14.24 "So you do have inequality between the partners," I said flatly. "Obviously all the partners are not equal if some merely go along with the views of the strongest."

14.25 "Your observation is partially true," replied the solicitor. "We’re not gods here: we can’t make people all the same and we don’t try to; we accept the individual differences of people and are usually thankful that they exist. Outside, the practice is for strong, rich and powerful people to exploit the weaknesses of others. Here a partner’s weaknesses are covered by other partners’ strengths. For example, I know the Rules and some of the reasons for them and I am trying to pass on this information to those interested partners who do not."

14.26 "Some partners are not interested in certain subjects such as international politics and economics. Furthermore they see no good reason why they should be forced to develop an interest when they know and trust other partners that have such an interest who can advise them on the way to vote and be good citizens in these respects when required. As a group our behaviour at the country’s polls is more responsible than almost any other group of citizens selected at random, since uninformed partners base their decisions on sound, accurate information from informed partners."

14.27 "Expulsion of partners is a delicate subject, but we all have to be aware of the rules regarding expulsion. Education is the best defence in this area, so pay attention."

14.28 "You will note," commented the solicitor as he directed our attention to the rules relating to calls on parts, "that the word ‘call’ is used slightly differently to the way it is conventionally used. Here we mean by ‘call’ a call by The Partnership on the personal capital reserves of the partners. The word ‘call’ usually refers to calling up unpaid capital on shares, but here we mean the marshalling of new capital from the partners in accordance with Figure 1(f). When we bought, for example, the capital equipment for the cannery we did a feasibility study which determined the type of plant required and we found the capital needed for the first stage of the project was $750,000. The Partnership had liquid reserves that provided most of this capital, and the difference was raised by calling on the partners under the provisions of this rule. The Partnership’s credit is good and we could have got the capital from the bank, but this would have meant the disclosure of some of our business activities to an arm of the State. Many of the partners disliked this to the point of preferring not to have the money - also interest rates are high and we prefer to finance all our activities internally and maintain complete autonomy. You should note that if a partner fails to pay as called, and if the general rate of inflation is 14%, the interest rate payable is 14 plus 6, that is 20% per year compound."

14.29 "You can see that it’s advisable to keep your own affairs in order in the expectation of having to meet calls from time to time. Calls are not uncommon it would be rare for a year to go by without one. The Partnership does not have capital reserves like a building society and its working capital is kept to a minimum since the partners want the surplus."

14.30 "Although this rule may seem risky since there is really no limit to the amount a partner may be called upon to pay, in practice there is very little friction because the partners know that the capital they contribute is adding to the net capital worth of The Partnership and is therefore building up their income now, and adding to the amount they will be able to collect when they retire. There’s also satisfaction in seeing in tangible capital assets the plans and decisions of the past - like monuments to past achievements that continually reminds us that we live in a continuum and that very soon the plans and dreams we have will take their place in tangible form next to those of past generations."

14.31 "Except for new partners who have not had time to adjust to partnership life, it is very seldom that a partner fails to pay a call, and then it’s as often the richer partners that fail to pay on time. On rare occasions a partner is temporarily unable to pay because of family or other commitments, but the love and care in this place is such that real problems of a serious nature are already being solved and the partner in trouble is never asked to pay if it is known that it would cause hardship. What often happens is that the board sends to the partner who is unable to pay a letter similar to that which is sent to the other partners except that it says that the call in his case is waived until such time as the board thinks fit and that interest under Rule 21 is waived also."

14.32 "Let us continue with Rule 21," said the solicitor returning to the rules.

14.33 "This means a partner has to meet his current obligations to The Partnership, and the price payable by The Partnership shall be the net capital worth divided by the number of partners (as in Figure 1) less any outstanding moneys due by the partner to The Partnership."

14.34 "It seems to me," contributed a partner, "that there is real power in Rules 21 and 22 and that they could be used to victimise a partner."

14.35 "Yes, I suppose they could," replied the solicitor. "Firstly though a majority of the board would have to be party to the victimisation, and this has never happened in any of the Christian partnerships we know. The spiritual aspect of this partnership is probably essential to our continued success. There is, however, nothing to stop non-Christians trying to live in partnership according to these Rules. Partnerships, like people, can get sick and fail to work efficiently. This is when equitable rules are needed - when people lose the love for each other that is characteristic of Christian partnerships and when partners start to want to get out. We hope this never happens to us, and we try to keep our relationships in good repair, but if we fail to keep good interpersonal relationships the Rules are there for our mutual protection."

14.36 "In other words, a partner has to pay his share of things up to the time he ceases to be a partner, and what he owes when The Partnership buys him out will be taken off what he gets," explained the solicitor.

14.37 "Note particularly the inability of even the most highly respected partner to lever into partnership one of his chosen sons on his death. This rule is designed to eliminate the admission to The Partnership on the ground of inheritance. We admit into The Partnership people on their merits, our collective need, and their needs."

14.38 "This last condition seems unnecessarily onerous," said a partner. "Wouldn’t you agree that we know all the partners well enough to delete it?"

14.39 "Perhaps we do know all the partners, and then again maybe we don’t. The families of the partners have merged with The Partnership so fully and effectively that it’s not as easy as you might think to differentiate between partners, friends, relations and adherents. There is no boasting about being a partner, and over the years faces of non-partners become so familiar at the store and at socials and the wider work of The Partnership that some could easily be mistaken as partners. It would be interesting to test the partners at The Partnership store some time and ask them who of the customers are partners and who are not - I’ll bet there would be a few mistakes! You certainly couldn’t tell the difference by the obvious work output. Some of the non-partners do more work than some of the partners! And some of the projects that have received board approval, and therefore qualify as contributing to the necessary hours a partner must put in, are so remote from the generally accepted idea of Partnership work, that some partners are not obvious by their work output. This is one of the reasons that we have training courses - so that the partners can be kept informed as to what each partner is contributing to The Partnership and therefore act responsibly when the decision has to be made each month as to how to split up the amount of money available for drawings among the partners. Our training courses are life-related: they are directed to the relevant parts of the partners’ lives and deal with issues including how the Rules operate under which we live, the history of The Partnership and its divergence from the mainstream of industrial history, the Christian vision of industrial organisation, and ‘how to’ courses like the economist’s on effective risk-taking - or more bluntly how to gamble effectively."

14.40 "The person who happens to hold the bankrupt partner in debt may be entirely incompatible with The Partnership and therefore inadmissible by the board. This rule is current but has not been applied since the partners have never allowed one of their number to be declared bankrupt. Help is always provided before this point is reached."

14.41 "Let’s pause. Are there any questions?" asked the solicitor.

14.42 "Yes," responded a new partner. "Are your services as a solicitor available to the individual partners and if so on what terms?"

14.43 "That’s quite a digression!" exclaimed the solicitor. "In general, all of the partners are available to each other on a mutually co-operative basis something like the way country people assist each other. For example, if you want a ten-minute advisory talk you simply approach me and we do it then or at some mutually convenient time. But if you have a more difficult problem, or you want a lot of work done, such as the conveyance of land, then I expect to be paid for this work either by Partnership time credits or by personal payment by you. I earn my living by running a clinic like the medic’s, advising The Partnership on legal matters, and conducting courses such as this."

14.44 "Do you mean to tell me that I have direct access for personal problems to all the partners’ skills just for the asking? Can I go to the mechanic and get my car fixed? Can I go to the medic and get a 'flu shot? And is all this free?" rejoined the new partner.

14.45 "Nothing is ‘free’: When people co-operate to earn their living, all that each can expect is that it will be significantly easier for them to get that living as co-operators. The price of access to others’ skills is their access to yours on a mutually available basis. My time is worth seven times the minimum rate. If you look at Figure 1(c) you will see how we account for the individual differences of the partners. We share time between the partners in the same proportions as we split up drawings - or at least that’s the theory of it. What usually happens in practice after a new partner has been with us for a few years is that there is really no account kept of partners’ time-sharing, and the partners with the highest drawings simply give their time to the poorer partners - or perhaps it’s the poorer partners who give their time to the richer partners. Come to think of it, we have not kept our time-sharing records up to date since no one has shown sufficient interest in this area of accounting. Every second generation or so there is a resurgence of interest by the partners in ensuring that the time sharing principle is strictly administered, but I confess that this is not one of those generations. Even in the hard times this present lot of partners gave without counting the cost. Personally, I hope they will continue to do this: it is good cement for interpersonal relationships."

14.46 "Why can’t we as Christians get along with each other without pedantic little rules like this?" asked a partner with a degree of frustration in his tone. "I’ve been on the board of The Partnership for three years now, and in all that time we have never needed to resort to these detailed rules."

14.47 "I think you have indirectly answered your own question," replied the solicitor. "The Rules must encompass the rare situation. You will excuse me for saying, but the last three years have been rather placid: the country has not been under threat of war, business has been satisfactory, and the surplus has been maintained at a satisfactory level. When there is violent disagreement between the partners on a particular matter after dialogue has taken place - that is, when there has been a meeting of minds on the matter and each partner’s view has been received and understood - that’s when rules such as these have to be applied. This is when we reap the benefits of having attended regular courses on the Rules: we know how to apply them appropriately in emergencies. The next rule on voting illustrates the point. Most matters are determined by consensus because of good relations between partners, but it’s on matters such as pacifism and group behaviour dictated by the pacifist stand that the chairman finds it necessary to apply the Rules laid down by the founders and honed by their successors."

14.48 "Why the secret ballot?" asked the factory manager. "I like to know who’s for and against me. It’s frustrating to come away from a board meeting with a defeated motion, and not even know the people who defeated it."

14.49 "Most of the business of The Partnership is conducted informally by show of hands," replied the solicitor, "but it is important to be able to fully release the thought power of all the partners on the board when contentious issues have to be decided. We are all different: some have overbearing and dominating personalities; others are quiet, reticent, reflective types. We need a correct decision, not action based on the dominance of a few. All the extremely important decisions are taken by secret ballot - all those decisions that can affect the course of The Partnership's history for generations to come. Take for example the building of the chapel: there was a strong preference by some partners to have it in their denomination. The chairman ensured that the partners complied strictly with the Rules and after extensive discussion they decided by secret ballot to make it Christian to the exclusion of all other religions, but not of any denomination."

14.50 "This is overt discrimination against non-Christians and there's a law against the exclusion and discrimination of people on the ground of religion!" said a non-Christian partner hotly. "How do you justify this stand?"

14.51 "You're a partner aren't you? We admitted you didn't we?" replied the solicitor rhetorically. "I suppose if enough partners felt strongly anti-Christian, they would have to form a splinter group and develop their own non-Christian partnership. But we would not allow them to break up our Christian partnership. This Partnership is a product of centuries of Christian thought and practice, and although there is nothing in the Rules overtly demanding that partners be Christian, the Christian influence is so strong that if non-Christians are admitted to partnership it is usually not too long before they either leave or accept The Partnership’s Christian way of life. We regard the law you refer to as anti-Christian. If the State enforced it we would have to consider harsh options such as liquidation, relocation to a less oppressive environment or operating outside the law of this country but inside the law of God. Early Christians faced very similar options and we, like them, do not have the option of becoming non-Christian. Fortunately we have considerable influence, and have been able to have the Government accept that this law discriminates against Christian organizations, but you are right the law still stands. It is one of our politician's main tasks to have it repealed."

14.52 "No apology is made by The Partnership for their Christian stand on matters of importance," continued the solicitor. "We have found fewer and fewer countries willing to accept our Christian practice. Usually, however, if a government can accept us as pacifists it can accept the rest of our Christian behaviour. I am forced to say that all the partners have to face the probable necessity of forced migration in the face of extreme right or left wing governments coming into power, and this is one reason we take a keen interest in the country's politics and have a politician partner with board approval for much of his political work. The partners want to be aware of the political climate for a variety of reasons from market changes to social changes."

14.53 "Are there any more questions on voting?" asked the solicitor. "What about proxy voting? What if I can’t make it to a meeting and want someone to vote for me?" asked a new partner. "Proxy voting," said the solicitor, "has been and is the cause of so much abuse and corruption outside that we have never allowed it. If a partner cannot or will not attend a meeting, then that partner must accept the decision of the partners who did attend."

14.54 "This rule has cost us a lot of business," commented the economist, "and it is obsolete: business generally operates on credit; some businesses could not survive if suppliers refused them credit; manufacturers generally don’t like dealing with us because we will not make a delivery without being paid beforehand or at delivery - and conditions are severe outside. Sometimes our customers have insufficient working capital to make these instant payments, especially if the order is large."

14.55 "I'm sure you could go on for some time adding to the list of reasons why we should delete the no credit rule," interjected the solicitor. "Regularly once every ten or fifteen years this question is raised by a partner at board level, and always the answer is the same: The Partnership retains the rule as is."

14.56 "You may be interested in some of the reasons," continued the solicitor. "This was one of the rules of the early pioneers in co-operative practice way back near the start of the industrial revolution. We may lose business, but the business we lose is the unstable, unreliable, slow-paying variety that we can do without. We have fewer headaches than our outside competitors since we have no bad debts, consequently no ill will, no court cases to do with bad payments and disputed claims, and far less paper work. The reduction in administrative costs is significant in a fiercely competitive environment. The partners say we cannot afford to add the cost of credit to our selling price."

14.57 "But it's embarrassing to refuse delivery until payment has been made or guaranteed at delivery!" exclaimed a partner. "It's primitive when the rest of the business community hardly ever see money. We seem to be out of step with the world at large."

14.58 "Perhaps it is not a bad thing for religious people to be out of step with the world - I certainly don't have much respect for the majority of businessmen outside. True, it's embarrassing when we refuse to deliver, but we have to do it. It's even more embarrassing when a partner arrives at a customer's premises to make a delivery and finds that payment is not waiting! The partner then has to refuse to leave the goods and advise the customer that a bill will be coming for an abortive delivery. This is our form of customer training: customers that want our products quickly learn our no credit rule. Our base market is the partners - they have to obey this rule, so you can believe me when I say that it is highly unlikely that the partners would allow outsiders to break it. There is also another aspect: working capital costs money and the rate of interest now is very high; this has resulted in putting many businesses that extend credit in order to get custom into severe liquidity problems. The partners believe that the money for a good has been earned when it is delivered and consequently they have the right to payment at delivery. An alternative is to charge interest at the current high rate on outstanding debts, since the partners believe the interest on the outstanding capital should accrue to them and not the customer. This would present an administrative nightmare with more disastrous implications for customer relations! No, we have to accept this rule and the slowdown in the rate of growth of our business that it causes."

14.59 "As for dealing with other manufacturers, we do not favour this type of business. In general for a variety of reasons The Partnership depends primarily on the production of finished commodities sold direct to end consumers. The Partnership peg for example. Our view of supplying other manufacturers is this: we will sell to them, but we will not be tied or obliged to them - we expect them to have a similar policy to ours and that is to eventually bring in all the work that has to be contracted out. Certainly, we would not want to become dependent on sales to other manufacturers since in general we do not have very much respect for them and they do very little to earn any respect. It may surprise you, but there are some positive aspects of the no credit policy: our contractors can be relied upon to give us priority when we need it, and sometimes we do because we, like other mass-producers, sometimes have bottlenecks in production due to a shortage of components; there's something about consistent cash payment to our suppliers that with time has added to our position of trust in the outside community. When The Partnership places an order everyone knows that if the order is obeyed, payment is prompt and automatic."

14.60 "It's largely a matter of customer training," concluded the solicitor. "All our customers, except the new ones, have accepted this rule. Any enquiry from a potential customer is given special attention: we go to considerable lengths to honestly explain the price, the quality, and the no credit rule. In practice most people accept the policy since they see how it reduces the price to them by reducing our administrative costs. They realise that if they want to buy from The Partnership, this is one of the conditions of purchase. If we once relaxed the rule for anyone, it would probably cause great discontent among others. And the majority of our customers who are cash-buying end users would be subsidising the often wealthier people to whom credit is given."

14.61 "As we are coming to the end of this lecture, perhaps now would be a good time to break for questions. New partners and visitors should note the locations of the two coffee machines in the theatre before they are obscured by the older partners now moving towards them." With these words the solicitor joined one of the coffee groups. Not wanting to miss the opportunity of a few personal words with the solicitor, I made my way to him and waited for an opportunity to ask a few questions and make his acquaintance.

14.62 I queried the tough labour rules. "Are the strict rules about the hiring of labour and requiring all the actual physical work to be done by the partners really necessary? Why don't the partners change: they own the enterprise?"

14.63 "One of the partners raised this earlier - perhaps you missed it. We were discussing Rule 2.4(c) and I indicated the spiritual dimension to this rule ... if we were not spiritually developed we would probably have deleted this rule long ago and degenerated to a lot of old partners living off contractors and hired labour. We recognise this hazard and retain the rule because we need mechanisms that allow young people in and necessarily therefore that ease old people out when they become ineffective. This may sound hard on the old partners that have given their lives to The Partnership, but what more equitable options are there? I know when I can no longer work my fifteen hours per week I will be asked to retire, and I tell you, I will retire long before that time arrives! The policy of doing all work in-house adds to the labour requirements of The Partnership and to the pressure for allowing new partners in."

14.64 "Where did these rules come from?" I asked. "Did you develop them from practice over the years?"

14.65 "No," laughed the solicitor. "We cannot claim to have been the originators of these Rules. The Rochdale Pioneers laid down the fundamentals in the nineteenth century. They originally intended to produce co-operatively as we do, but times were hard then and they failed as manufacturers. The Rules, however, remained to be used for co-operative manufacturing as they were intended. All we have done is to hone and adapt them to our time and technology. The principles involved are essentially the same since they are based on human nature and behaviour that doesn’t seem to change much with the centuries."

14.66 "Suppose I want to leave The Partnership, but it hasn’t got the cash to pay me my part of the net capital worth. What happens then?" asked a partner.

14.67 "Rules 5(e), 6(c), 8, 13 and 17 cover this aspect. Essentially the situation is this: you are entitled to receive your money within one year of your formal withdrawal of your partnership. The Partnership is obliged to pay your part of the net capital worth based on current prices which accounts for inflation. This can be paid from liquid reserves, by raising a bank loan, or by personal gift or loan from the partners. If all these methods fail to raise the necessary capital, The Partnership must be wound up and distributed amongst the partners in accordance with these Rules."

14.68 The coffee break over, the solicitor asked us to resume our places and consider the remainder of the Rules.

14.69 "Working capital is so important that specific board responsibility has been written into the following rule for its maintenance," commented the solicitor.

14.70 "That concludes the formal part of this lecture," said the solicitor. "I hope that you have found it sufficiently stimulating to return in not more than five years for a refresher course. Most of you have a copy of the book on which this enterprise is based, entitled appropriately ‘The Partnership’, and if you refer to it, you will find the contents to the Rules. Are there any questions?"

14.71 "I am interested in that rather glib little statement in Rule 2.4(c) that requires the board to determine drawings on the basis of ‘the quality and quantity of work done’. What are the mechanics of this? Isn’t it a source of friction?" asked the mechanic.

14.72 "It will soon be your turn to do a term on the board," said the solicitor, "and then you will be in a better position to understand the responsibility of the board in setting drawings. Outside it is a mark of status to be on the board of a profitable and successful enterprise and many men nominate because of the power and status conferred but this is not the case with The Partnership. Perhaps we started off with a small residual element of these motives, but as the years passed people started to view a place on the board in a different perspective. We started to realise that the board serves and is not served, that it’s time-consuming setting the agenda, organising the meetings, settling disputes, typing and checking the minutes. For many of the partners it became an onerous commitment and they were glad when their term was through. What, you may ask, does this have to do with setting drawings? It is the culture of the board - the culture of The Partnership - the spiritual approach and leading of our deeply committed religious people on and off the board that makes it possible for these decisions to be taken without significant friction and with a reasonable degree of justice and equity. Partners on the board are there because they have been rotated in, and they give their best knowing it will soon be their turn to receive the same justice they have now to mete out."

14.73 "But that does not answer my question on the mechanics of setting drawings," said the mechanic. "How do you measure the quality of work done? I know we all measure the quantity of work done by the time sheets we have to fill in each day, what about the quality?"

14.74 The solicitor responded, "Let’s deal with the easiest aspect first: the quantity of time put in by each partner. In this partnership we have enough work to enable people to work as much as they want - we believe one of the prime functions of management is to provide sufficient productive paid work for the partners. If a partner who wants to work long and hard is allocated insufficient work to do, then this is accepted as a management failure. As we know from Rule 5(e), there is a minimum fifteen hours per week to be worked by each partner, but you will note that there is no maximum. People have different needs: some need a large income for dependent family members, or for the support of one or many personal needs. We don’t officially ask why a partner needs more money, although The Partnership is so close knit that if a partner is in trouble, or has some costly interest, we all usually know because the partner tells us. If a partner wants more money to pursue the world’s materialist goals, we don’t ask about that either. Partners are free - they choose their personal goals and provided they are prepared to contribute their labour to support their claims for additional money from The Partnership, then it is regarded as The Partnership’s obligation to provide productive fully paid work for them in the same way as work is provided for another to pursue an altruistic goal. I must add that materialism as outsiders practice it has almost disappeared from the behavioural patterns of the partners - they have developed beyond the crass materialist phase and, using their secure incomes and relationships as springboards, they usually work toward higher goals. New partners often bring with them strong ownership attitudes and materialist goals, but after five or ten years they get tired of working long hours for money and with careful nurturing by the older partners start to bear the fruits of the Spirit. Thus the reason for the time sheets: only to inform the board of how many hours each of the individual partners has elected to work."

14.75 "One point of interest here," digressed the solicitor, "is that The Partnership seems to have the reverse problem to outside firms in that we have trouble getting the partners to record the full number of hours to which they are entitled. The partners often don’t seem to care that they have not recorded hours that are worth money. Often board members have to plead with partners to tell them what they are doing in The Partnership’s name, so that the board will be informed, and the partners justly rewarded. This is a problem since the goals of The Partnership have merged with the goals of the individual partners to such an extent that ‘work’ has a very wide meaning, and without accurate information the board is unable to pay in accordance with the quantity of work done."

14.76 "The quality of work is a far more difficult and subjective matter. It is one of the main preoccupations of the board. In the end we simply have to use the brains God gave us to make a fair and reasonable estimate of the relative worth of each partner’s time. We are faced each month with a certain amount of money to split up among the partners in accordance with the quality and quantity of work done. We have the relative quantities from the time sheets, but the quality factor reduces to knowing what each partner has been doing, knowing the abilities of each partner and making a judgement. It’s not really as hard as it sounds - you’ll soon get used to it when you get on the board. Figure 1(c) and Rule 2.4(c) give some guidance: no partner can draw more than ten times the minimum rate per month [Figure 1(c)]. If a partner works 160 hours in a month that partner draws 160 times that partner’s hourly rate, and partners who work the minimum 60 hours draw 60 times their respective hourly rates - but they both get the same share of the surplus when it is distributed since their individual differences have been taken into account in the variable hourly rate, as in Figure 1(c), and the variable hours worked. Precedent also helps a lot: we only have to determine a partner’s hourly rate on entry and when there is a change in productivity, and usually it’s a reasonably easy value judgement based on the hourly rates of the other partners. I am convinced that many of the partners are being underpaid because they do not tell the board what they are doing. Partners with creative streaks are more likely to start putting in a large amount of time and even some personal capital, and we only find out about it when one of us meets with them, perhaps socially, and they bubble over with their new interests. If this happens we cannot make retrospective payments since all the income has already been divided and distributed, but we can adjust future drawings. This is one reason for our strong bias to training - we want people to tell us what they are doing in The Partnership’s name so that others can contribute and co-operate, so our skills and resources can be deployed to the best advantage, and so that our people are rewarded for the quality of their work. We realise the value of creativity, and we foster and develop it."

14.77 "I have been thinking about Rule 2.4(c) requiring all The Partnership’s work to be done in-house as far as possible," commented a partner, "and I wonder how splinter partnerships are viewed in the light of this rule?"

14.78 "That is an excellent question. In practice this rule is taken to mean that all work should be taken inside a co-operative productive partnership - we try not to compete with other co-operatives and we try to assist and co-operate with them in the business of earning our living. There has been a certain amount of reciprocity in this regard over the years too - the most significant inter-co-operative work that is currently under way in this country is The Partnership Bank. We are trying to have the strong partnerships cover the weaknesses of the fledglings, to bring interest rates under our control, and to centralise liquid reserve deposits. I must say that we are having a certain amount of trouble with the government getting this project started because of the partners’ insistence on confidentiality ... we are refusing to release any data to the government on the level of our liquid reserves or personal data on partners that the government wants to enter into their central computer ... and autonomy ... we are refusing to allow the government any control at all in the use of our capital reserves either in peace or war. It may be that we will just have to continue on in the same way as we have in the past: an informal arrangement, the regular inter-partnership conferences which most of us regard as enjoyable holidays ... and they are, and they should be ... and the preparedness to assist in Jesus’ name when called upon. Notwithstanding, there is a strong desire to formalise inter-partnership ties perhaps by co-operating to design and build more complex products, with components from various partnerships."

14.79 "I notice that The Co-operation Act talks about ‘society’ and ‘member’ where our Rules use ‘partnership’ and ‘partner’. Why is this? What’s the history?" asked the accountant.

14.80 "The truth is we are genuine partners in partnership, not shareholders in a company or members of a society," answered the solicitor. "The founding partners were not prepared to compromise truth by signing any agreement that said otherwise merely to fit existing laws - so they changed the wording and worked to frame and interpret law to accommodate truth. Most countries now have an act applicable to extended partnerships constructed in accordance with a co-operative productive design. When the Rochdale Pioneers wrote the basic rules, they had uppermost in their minds the co-operative productive form of enterprise ... unfortunately they never realised their ambitions. They were sidetracked somehow into becoming a retail and wholesale organisation ... there were many pressures on co-operators in those difficult days. Then co-operative acts were modified over a lengthy period to suit non-productive non-profit organisations such as credit unions, building societies, wholesale and retail co-operatives. Eventually, after much struggle, The Partnership’s founders managed to get our government to accept the use of the model Rules and the Act as they were originally intended, but the Act still uses ‘society’ and ‘member’ since there are still relatively few partnerships. When the Act is interpreted for a partnership, the precedent has been set long ago to merely substitute ‘partnership’ and ‘partner’. There are some grey areas in applying the Act to an extended partnership, or co-operative, but in the main it is routine now."

14.81 "Reverting to your personal involvement in The Partnership," I said, "how do you fill in your time? Do the demands of this course and the legal aspects of partnership life really justify a full-time solicitor?"

14.82 "Most of my time is consumed in conveying property," replied the solicitor. "The Partnership’s computer had excess capacity for the routine work, and the partners entered data on their properties for sale. The business has grown to include the general public. Buyers pay us for a computer output of properties available in the area and a price range of their choice. Sellers pay to put their property on our website. I don’t do very much routine work since the forms and formalities are all dealt with by a clerk. My input is confined to problem solving in the non-routine areas of contract interpretation and disputation. The prices being charged by outside solicitors and agents became intolerably high as they adhered to their percentage take as inflation increased, and so The Partnership entered the real estate business in the usual way: first serving the partners, then the public. The Partnership sets the fees to allow for costs plus a reasonable profit - we do not charge according to the property values involved since the amount of work we do is not related to the property value. It was really surprising to see how the business flourished: people were very pleased that The Partnership had entered the field and the trust shown by our regular customers, and the lower prices they enjoyed, soon spread. There is work for two solicitors, but, with our practice of work distribution and job rotation, I cope. Clients who use our computer service are not obliged to use us to convey their properties - they can use outside solicitors or cut costs by making an agreement between buyer and seller to use a cheap do-it-yourself kit, but I do not recommend this latter course as a mistake can result in ruin."

14.83 "Perhaps I should add one further point about the necessity for contracts due to the darker side of human nature," went on the solicitor. "Labour contracts are common in some countries, non-existent in others. Building contracts are common the world over. Slavery was deemed necessary when the terms were too harsh for the weaker party to agree given free will. People tend to renege on onerous obligations while demanding benefits - hence the necessity for a contract so that each person knows their obligations, rights and benefits before entering upon a venture. Humans have a great ability to rationalise in their favour, to exploit if the terms of the contract allow it, to see their side as the right side. Even if a person starts a venture with the best of good will, time goes by and if there is no written contract then time erodes the memory of a verbal agreement. A contract is necessary to anchor people to their commitment to a stated and agreed goal."

14.84 "You have learned that The Partnership pays the partners in accordance its capacity to pay, thereby relating directly the partners’ labour input and its reward. Capital in The Partnership acts as a cement which strengthens the internal bonds over time as the capital invested by each partner increases."

14.85 "Since the partners get all there is in the form of drawings and surplus, they cannot argue that they should get more as they already get all there is. All they can argue about is the distribution of The Partnership income among themselves, and they determine that. The reason for the conventional strike is therefore non-existent in The Partnership. In a wealthy partnership such as ours there is a big difference in the amount received by a partner based on the genuine capacity of The Partnership to pay, and the amount the partner would receive as an employee in a conventional for-profit company where payment is based on ‘work-value criteria’ that are usually not honestly related to the productivity of the enterprise."

See the Contents to the Partnership's Rules.

Go to next chapter.

From The Partnership, by Graeme Doel.

Converted to HTML by Simon Grant, 2003.