Wednesday, November 15, 2006

The non-ubiquity of Co-ops

As promised, here is an explanation for the failure of Co-ops to take over the world. Or at least one that sidesteps the bigger question of investment.

As you already know, the forces that aspire to exert any control over society have to ensure that they are they are deployed appropriately, and they have to hope that the historical trade-winds are blowing in the right direction. So big and small business, the police, the various professions, social classes and bureaucracies all have their ducks lined up to defend their interests.

If I had any clout, or a largish audience, I’d probably have the CBI on my ass every time I offered evidence that their members were a shower of leeches. Similarly, if I were to question the handouts that support small businesses, or if I were to suggest that there are better ways of managing the economy than promoting them, I’d probably hear from the FSB sooner or later.

Critical of your quack? Not if the BMA have anything to do with it. Whenever a journalist has a dig at the quality of senior civil servants, they can expect a stiff letter to their editor from the FDA. Anyone of any substance who slights Inspector Knacker can expect a stiff rebuttal from The Police Federation. Other professions have their Unions and trade associations. And journalists have ... well... the media.

And so on.

Now, I’ll admit that some of these organisations are more protectionist than others. Some have a regulatory role that insists upon a degree of neutrality, but generally, they offer protection to a particular grouping. If you wanted to really challenge the power of big business, you would have to outmanoeuvre the CBI, and if you want to do that, you’ll need to be up quite early in the morning.

But which organisation takes up cudgels on behalf of Co-ops? Who insists that this business model is cultivated and evangelised? Who rebuts slights against Mutualism? Who hires lawyers on behalf of Co-ops and Mutuals to do a line-by-line reading of upcoming legislation? Who focuses and builds the voice of those of us who work in the co-operative sector?

Well, if you wanted to raise a laugh, you could say that there is Cooperatives UK. And then there’s The Co-op Party. Now, in my experience, the Co-op Party is primarily a route to Parliament. If you want a safe Labour seat and have no Trade Union connections, the Co-op Party can offer an alternative. For years it has had most of it's funding from the big consumer Co-ops and, sometimes, when some contentious project that has a Co-op veneer emerges, (Foundation Hospitals was the most recent) then the Co-op Party is wheeled out to support them.

But neither the Co-Op Party or Co-operatives UK are much of an asset to producer co-ops, small consumer co-ops, or Mutuals as far as I can see.

I say all of this, by the way, not (just) to have a dig at either the Party or Co-operatives UK. I say it because I think that there is a fatal flaw in the pro-Co-op argument. None of us generate much of a surplus. We reinvest profits or - in the cases where we are very profitable - we distribute a portion of them to staff. Staff who may sometimes be even more short-termist than conventional investors.

Co-ops are often structured to supply 'at cost', or to provide services that the market can't incentivse itself to provide otherwise. We don't have the motive to grow that other businesses have. We have no shareholders yapping at our heels, and there is insufficient motive for us to fund an aggressive trade association.

However, if we were to develop a powerful voice, I suspect that these two organisations could be morphed into something useful. And of the two, the Party is the most likely candidate. It would take a good deal of restructuring and a shift of focus, of course. And it would need to disincentivise people from getting involved in order to further a parliamentary career.

Anyway, they’ve set up a blog now. It’s here. Go and guide them in the right direction if you like? In the meantime, if you’re just into uniforms, have a look at this (work-safe but maybe embarrassing) instead.


matcroydon said...

A thoughtful critique. But is the limit of the aspirations of the Co-op Commonwealth more small producer co-ops? Of course they're great in theory and in practice, but whilst they're concentrated in trades like health food, bicycle repair, arts, rickshaws and fairtrade imports, the co-op model won't appear mainstream to either the public or traditional business.

So the Co-operative Party is working on issues relevant to the widest section of the public; to involve people through mutual models in the services that matter to them; to use the opportunities for large-scale mutualisation in public services. That is why we have developed foundation hospitals, football supporters' trusts and mutual housing models for stock transfer of council housing. Three examples of real action creating thousands of new mutual members, newly active citizens. That's why we have engaged the 600 or so official Co-operative councillors to work on their councils to develop mutual alternatives to outsourcing relevant to their area. That's why we have been able to convince the government to bring failing private businesses back into public ownership through mutual models, like Network Rail and Glas Cymru.

There's another challenge - to become a 'proper' co-op, it is more difficult and expensive than to incorporate as another company structure. That's why, after lengthy work by the Co-operative Party (started through the success of two private members bills) , one of our MPs, Ed Balls, has been able to announce a major review of co-op and credit union law to bring it into the 21st century, so that it's a viable alternative for mainstream business start-ups, not just the committed few.

Ironically, a traditional criticism of Co-operatives UK has been its focus on small niche producer co-ops. It is not a wholly fair criticism, but worth noting. I hope that we agree that mutualism has to move from its traditional sectors into new areas, and be a viable alternative for any business start-up. But the Co-op Party has to work in the here-and-now as well as the long-term. And that means taking our opportunities where we find them.

Thanks for the plug,


Sam said...

Out of interest, what other contentious projects have been given a Co-op veneer to ease their passage?

Just wondering.

P.S From my (consumer Co-op) point of view, Co-ops UK and the Co-op Party seem to spend a disproportionate amount of time on small producer enterprises, which is ironic when their funding comes primarily (totally, in the case of the Co-op Party) from the consumer movement.

Paulie said...


You have, indeed, caught me being more cynical than I need to be on contentious projects.

On the wider question of how Cooperatives UK supports small producer co-ops, it may well get most of it's funding from large consumer co-ops and devote it's energies to small producers.

But that's exactly my point. They don't do it particularly well, I don't think (having set up a producer co-op in 2002, I've never seen any benefit from Co-operatives UK's existance. But this is not due to them being either careless or lazy. My point is that, because we aren't growth oriented, we don't have a pressing need to develop strong professional associations or advocacy organisations. We, as companies, don't have ambitions to grow our sector. So, though our sector is A Good Thing, and more Co-ops would be A Good Thing, we will never create / fund a body that will promote the kind of expansion that is (I'm arguing here) in the public interest.

Sam said...

Thanks for the response, and I appreciate your point. I have no real experience of Co-ops UK, so am willing to accept your judgement on its efficacy.

In terms of the lack of potential and willingness to grow in the Co-op Movement, I think that the Co-op Group (did I hear booing and hissing?) might be an exception. I get the feeling that the Society is only too willing to grow in areas where it is economically advantageous - the problem is more one of resources.

Anonymous said...

One way might be to get involved with the other parties. It always strikes me that being involved with just one party means that you ultimately can be ignored but if you get involved with all three you become a constituency that people woo. Obviously Coop historically has been a Labour thing, but why not have Coop LibDem members and even Tories occasionally could be persuaded of the benefits of mutualism its just that noone tries to persuade them.

matcroydon said...

The Co-operative Party is (as you would expect) democratically run. Every few years one or two members propose a rule change or policy change to work with other parties or break the link with the Labour Party. They are resoundingly beaten. There is no desire within the Party to do this. The truth is that the Labour Party has been a good friend of the movement, and in government nationally has delivered three Co-op Acts as Private Members' Bills and several other pieces of legislation that create or strengthen mutuals and further co-op values. Tories and Liberal Democrats should be encouraged to support co-operative solutions nonetheless, and there are efforts to do so.

Anonymous said...

Having been in a worker co-operative (is that the same as a 'small producer co-op'?) that I helped to found, for about twelve years, being a member of two consumer co-ops, and someone who works in Co-operatives UK, I feel I may have something to contribute here.
I disagree that worker/producer co-operatives are not growth oriented. One has only to look at the roaring success in recent years of the wholefood distribution co-operatives, which have seen their businesses expand at a rate of knots. I don't think anyone could say that Suma wasn't interested in growing its business. But Suma isn't representative of all worker/producer co-operatives, just as I'm sure that Paulie's co-operative would not see itself as representative. Thr truth is that the sector in the UK is so small, and relatively fragile, that one cannot draw such general conclusions like "we are not growth oriented".
My own epxerience of working in a working co-operative suggests to me that we were - and as far as I am aware that business remains - very much focused on making good profits and growing its business. I would argue that any worker/producer co-operative that is not to some degree profit motivated is not a sustainable enterprise. Of course, co-operatives are about more than profit, but it remains an essential part of the mix.
I take the criticism of Co-operatives partly on the chin. The organisation could indeed be more focused, and work more effectively to promote the co-operative model. The key benefit of any trade association is about providing a forum for members to learn from each other and work together to promote their interests. I have to say that many smaller worker/producer co-operatives seem pretty uninterested in talking to each other, and certainly unwilling to invest the roughly £1 per week that membership of Co-operatives UK costs. Despite this the organisation continues to develop services and provide a platform for the worker/producer sector that far outstrips the current ability of that sector to fund the work involved. We have developed - in partnership with the Co-operative Bank - free banking for co-operatives that have saved some of our members hundreds or even thousands of pounds a year in bank charges. We offer members access to low cost business insurance, which for some has meant premium reductions substnatially higher than the modest membership subscription fees. We are about helping smaller co-operatives to reduce their business costs, and so improve profitability and their chances of longer term survival and growth.
This disproportionate support is in part because there is a belief that the worker/producer sector has plenty of potential in the UK. A small group of co-operatives in that sector are now working hard to engage with Co-operatives UK, and more importantly with each other, to help to build their profile and make things happen. More power to them.
As a democratic co-operative enterprise itself, Co-operatives UK is there to do the bidding of its members - why not engage, participate, and help to set the agenda?
But it has to be said that part of that effectiveness surely should stem from closer co-operation between itself and other bodies such as the Co-op Party. And from my perspective I see plenty of scope to improve that.

Graham said...

My comment above was anonymous, not because I don't wish to be known, but rather because I'm unfamiliar with this blogging tool...

Sam said...

At the risk of hijacking Paulie's thread and turning it into Co-opnet, I would say that gracchi makes a good point if he was talking about the Co-ops themselves rather than the Co-op Party. Individual Co-ops should welcome members from all political persuasions and none.

Paulie said...


I'm not sure you've understood my orignal post. I'm not really interested in putting Co-operatives UK or The Co-Op Party on the back foot. And life is too short to spend much time 'engaging' with them either.

We could all agree to invest £1000 a month in Co-operatives UK and it wouldn't make much difference. Please don't infer from my post that I'm suggesting that Co-Operatives UK isn't big enough or doesn't do enough. I don't think that anything that I'd like to see happen could happen if Co-Operatives UK got bigger or did more. I AM saying that our sector doesn't have an intent to grow in the way that others do.

I am, of course, cock-a-hoop at the growth of wholefood co-ops - insofar as it goes. Don't expect me to eat the stuff, that's all.

But my point isn't that we can't grow a little bit. My question is this:

How come (given that co-ops are a very efficient business model that provides high quality services) every major government agency isn't a co-op? Wny isn't the BBC a co-op? Why isn't every outsourced local government service (from refuse collection through to pre-school nurseries) a co-op?

Some institutions (in the loosest sense of the word) are expansionist. Large sections of Whitehall simply double in size every time you look at them. When public services were privatised, the cost went up not down. The bureaucracy became more - not less - dense. This is because management consultancies are expansionist.

The armed forces can magnify any threat and increase the salaries of senior officers at will, and politicians will fork out for it - because they are an expansionist organsation, and they have spent years learning which buttons need to be pushed, and when. A relatively small % of troops are in Iraq and Afghanistan while the majority are polishing their helmets in Germany, Cyprus and Northern Ireland - but hey presto! They're officially 'overstretched' and no-one dares to contradict them.

That's what I mean. Maybe I'm saying that we aren't a hegemonic force, but I'd need to look the phrase up properly first.

scumboni said...

Businesses go through life phases - startup, growth, maturity, crisis; so do business sectors and their political and trade bodies. The 'mission failure' of the old Co-op Union (now Co-ops UK) and the Party are surely a reflection of the decline and crisis of the consumer co-ops, which have become decadent, in the sense that their original function of providing cheap, unadulterated food for the workers has been usurped. Hence the split between the senior managements, mostly professional retailers who are looking for a way to compete definitively with the big four, and their increasingly moribund boards of lay members.

The consumer co-ops have been persuaded to in effect subsidise the cost of member services to worker co-ops within Co-ops UK. Perhaps this is because the worker co-ops are thought to be a more youthful, vigorous bunch who will make a valuable contribution to the ideological and corporate reformation of the movement. Trouble is, many of our leading worker co-operators are getting a bit long in the tooth themselves. The late 70's and early 80's generation of new co-ops were formed on a wave of political and practical necessity; some survived and professionalised, and are now themselves plateauing and in need of renewal. In effect, these co-ops have been through the full business cycle in around 30 years, as opposed to a century or more for the consumer co-ops.

Let's see if the consumer movement rebranding (by far the most significant part of which is the relaunching of the membership proposition) succeeds in repositioning the retailers as a genuine, popular alternative to the megacorps. As for the worker co-ops, maybe the top 20 should agree to put 5% of their net profits annually into a fighting fund for political representation and the development of the movement (the other 400-odd are mostly in business survival mode).

If the consumer co-op rebrand fails, and the societies continue to lose market share, then we need to have a serious look at ourselves. Instead of pissing away the huge wealth and assets of the movement - which after all only represent the crystallised dead labour of generations of workers - it should perhaps consider shutting up shop, and redistributing that wealth anywhere in the world where working class people are trying to set up and finance autonomous projects.

Graham said...

I think I'd have to disagree that the co-operative movement is not interested in growth. Ironically, from what I can see it already is a pretty large sector of the economy on a global scale. See the new ICA Global 300 site for example, which suggests that the world's biggest 300 co-ops alone constitute the world's 9th largest economy (or roughly the same as Canada or Russia).
In the UK perhaps the picture is a little different, but I know plenty of people in the co-operative sector who are very keen to see substantial growth. A lot of work has been done, and continue to be done on the 'co-operativization' of externalised public services, with significant success in health and social care sectors for example.
For me the real issue is the lack of a coherent sense of purpose and vision across the cooperative movement. Indeed the term 'movement' is probably incorrect. The majority of those in positions of power, with notable exceptions, are so concerned with their business success (and it is clearly critical that co-operatives are successful businesses) that they pay too little, if any, attention to the question of why they are in business in the first place. More progressive and visionary leaders are in the game because they want to change the world - to these people the business is a vehicle by which this broader goal can be realised.

Paulie said...

We are broadly agreeing Graham.

But my point is that - as a powerbloc - the co-op diaspora isn't hoovering up the attractive stuff. It picks up the crumbs from the table.

"Insoluble problem? Well we've tried everything else, so lets try some co-op idea."

There is no co-op equivalent of Capita in the UK, for example. Capita have agressively promoted the transfer of government agency work into the hands of management consultants - a power-bloc within the wider blog of 'big business' for want of a better term.

There are plenty of other bits of chessplay that could happen, but we don't have any real force (apart from artificial constructs like The Party or Co-ops UK) that can create the kind of energy and momentum needed.

Allotment Plotter said...

Retail Co-ops are in a mess because:
(1) They are too unwieldy big - Leviathan almost in the case of the Cooperative Group.
The Co-op had the bedrock support of local people. Each town had it's coop society, they shopped, met and were buried by it.
My father would, we he alive bust a gasket if he saw me with a TESCO bag. He used to say:
"Why put money in the pocket of the capitalist when it can be in yours!"
(2) They are mainly directed at the top by money grubbing greedy lazy inefficient retired or working or partners of staff.
They have crippled the co-ops, using political blackmail to gain terms and conditions far away from either the norm or indeed with profits the way they are, deserve.
(3) in many cases coops are expensive, stock very little choice, the staff are surly. However the dividend has been rduced to below the rate of inflation. From a pecuniary point of view 60p for a tin of soup from the coop that is 35p at TESCO is economic madness for Joe Punter (always more Joe Punter's than Shareholders.

Of course there are exceptions: Chelmsford Star Coop, which is small, friendly, run by the members, not a poisonous clique.

The Coops one claim to supporters was that:
a) Profits went to those who shopped locally, to to far distant investor capitalists
b) The Coop was democratic, fair, for the worker, fair shared, high quality,
3) That the Coop was a whole organization: shopping, education, entertainment.

It is with honorable exceptions mot this now.

By the 1960smost coops wanted to shed their coronation street image, subsequently crapped on their base , raised prices, cut services, closed stores garages etc and now recieve their treatment in kind.