Is this the golden age of co-operatives?

Posted on October 30, 2012


As we celebrate the end of the first ever United Nations International Year of Cooperatives, there is a sense of the dawning of a ‘golden age’ for co-operatives in the UK. All the main political parties are signed up to co-ops. The buzzword is ‘responsible capitalism’ and there is a realisation that the existing neo-liberal model of global capitalism is broken.

Is a co-operative economy in the UK feasible? Deputy PM Nick Clegg, apparently thinks so and has been loudly promoting the benefits of the ‘John Lewis’ model of economic organization. But that is the problem. While there is a surprising amount of consensus around co-ops being a ‘good thing’, what different political parties really mean by a ‘co-operative economy’ is very different.

Historically, a lot of Conservatives have been hostile to co-operatives, after all ‘the Co-op’ was part of the Labour Movement. The burgeoning worker co-ops movement was one of the ‘new social movements’ of the 1980’s, with a green-ish, hippy-ish tinge. ‘The Co-op’ was seen as irredeemably old fashioned, being elbowed out of the way by the new ‘real’ ‘people’s store’, Tesco. How times have changed. It is a very real step forward that all political parties, at last, take the co-operative model seriously.

Capitalism has become less sustainable over the past 30 years precisely because the relationship between Governments and corporations has become skewed, with far too much power being vested in corporations. They are natural monopolies and frame the rules of trade to suit themselves. Globalisation has accentuated this process. The result has been a dramatic narrowing in the diversity of business types across the developed world. Capitalism lacks ‘ecological diversity’ and as in nature, there are unintended consequences. It’s inherent instability and brittleness has been graphically exposed to view in the past five years. Co-operative models are definitely part of the social democratic solution to this problem.

The good news is that there has been a real flowering in the diversity of co-operative models in the past decade along with the arrival of some wonderful new role models and the re-invention of the consumer co-op movement. But I don’t agree that Nick Clegg’s ‘John Lewis economy’ is the way forward. Yes it is successful, but it is also (deliberately) paternalistic and isn’t actually co-operative.

Better to celebrate the amazing diversity that entrepreneurial spirit and in many cases, sheer guts, supported by the last Labour Government’s legislation, has created in the co-operative, community and mutual sectors in the UK in the past decade. It is this that has brought the co-operative idea into the mainstream as more and more people (and politicians) have had direct and positive experiences of these ventures. Community shops and bookshops, pubs and post offices especially in rural areas, housing co-operatives, co-operative and community energy companies, innovative consumer co-ops like The Phone Co-op, community transport companies like Commonwheels, farmers markets, veg box and Community Supported Agriculture schemes and co-operative football clubs, have all reached individuals and communities for whom previously, the word ‘co-op’ meant very little.

Equally, the demise and bail out of former mutual building societies like Northern Rock, Bradford and Bingley and Halifax, are a constant reminder to people that short term profit should not be the only objective and is not in most people’s interests.

Let’s too not underestimate the positive contribution that the rebirth of the consumer co-op movement has had on this agenda. The Co-operative Bank is seen as a beacon of ethical banking – many of their competitors would kill for their brand image – and when their bid for part of the Lloyds Group is finalised, will have a 7% share of the retail banking market. Co-operative societies like Midcounties are collectively the fifth largest food retailers in the country with 6.5% of the market. These are concrete examples of co-operative business working in practice for millions of people to experience every day.

Even the ever controversial Network Rail and the emergence of public service mutuals in the health service, education and local government, are demonstrating that there are viable alternatives to the corporate failures people see around them. New ideas are emerging from the most unlikely sources, like Tory MP Charlie Elphick’s proposal for a mutually owned Port of Dover. Other Tory MP’s like Chris White and Jesse Norman have been forceful and articulate advocates. Without their support it is unlikely that Co-ops UK would have had such an enthusiastic response to their proposals for a new Co-operatives Act from David Cameron. So that’s it then – the battle has been won and a new golden age of co-operatives is dawning?

Unfortunately not. Multinational corporations and other monopolies (think News International) play an enormously powerful role in our economy and across the globe. Their influence on politicians and policy makers remains disproportionate and their economic power is extraordinary. Before it crashed, RBS had a balance sheet that was bigger than the entire UK economy.

Nevertheless the culture of short term-ism is changing, and a rebalancing of the economy away from the financial sector is undoubtedly under way – at the same time as Britain’s global economic power is diminishing rapidly. But to successfully challenge these extraordinary concentrations of political and economic power, we need to seek progress on a number of fronts at the same time. Strong trade unions, shareholding for the long term, employees on boards and remuneration committees, a culture of accountability (not just transparency) by directors and their companies to stakeholders – customers, employees, communities, the planet, a focus on long term investment not short term profits, a network of independent middle sized businesses like the German mittelstadt , are all essential. Along with a vibrant and growing co-operatives, mutuals and social enterprise sector, these are all things that need to happen (along with a lot of others, such as serious investment in low carbon infrastructure and a sustainable economy) to enable the creation of a new economy.

This is where the political divisions about co-operatives I referred to are likely to emerge. A lot of these proposals, admirably social democratic in nature, are therefore anathema to many in the coalition Government, who I suspect would be happy to see a (larger) niche co-op sector, but nothing that would seriously challenge the ‘business as usual’ mainstream, who would be left alone to get on with the real business of making money, conscience salved.

As the UN year of Co-operatives draws to a close, we should have a larger ambition. Co-operative models can and do lead the way and will I hope, become a much bigger part of a more diverse ‘ecology of commerce’. But co-operators need to support all these elements to create a sustainable and democratic economy. For the first time in more than a generation the intellectual tide is flowing our way.