A US perspective on Co-operatives in the UK

Thanks to Bernard over at workers paradise I've been allowed to repost an article, giving a US perspective on recent goings on in the UK.

Are British politicians proposing to alleviate austerity by creating co-operative public services?

In Great Britain this spring, the Labour Party, in power for thirteen years, is threatened with electoral defeat by the Conservatives. The British public, disgusted with Labour’s submissiveness to the bankers, may vote for the Conservatives as a protest – a political dynamic Americans will recognize.

The Labour Party re-branded itself as New Labour to return to power in the late ‘90’s after twenty years in opposition. It formally jettisoned its socialist heritage (abandoned in practice since the 60’s) and opting for a “progressive” neo-liberalism. Labour’s new leader, the young and photogenic Tony Blair modeled his campaign on Bill Clinton’s, and even hired Clinton’s managers to direct it. Labour won handsomely.

Blair’s star declined two years ago (he can thank Bush and the Iraq war) and Gordon Brown, his Chancellor of the Exchequer (Finance Minister) became party leader and Prime Minister. Brown, as Finance Minister and then as Prime Minister championed unbridled financialization until the banks collapsed, so it’s fitting he gets booted out of office. The Conservatives, not a better alternative, are however not certain of victory – their “numbers” are declining – and so both parties have been scurrying about to find a Big New Idea to wrap themselves in.

That idea is to have public services, like healthcare and education, managed by their staff. To push this program, bizarre in itself, both parties are endorsing the participatory management structure of John Lewis, a home furnishings retailer and supermarket chain. This 150 year-old enterprise, employing 70,000 and grossing £6.05 billion ($7.5 billion), introduced profit-sharing in the 20’s along with a system of employee respect and recognition that today accommodates staff-wide communication from the clerk up to the president. It’s not a worker co-operative. There is no equivalent business that Americans can related it to; it might be characterize as a firm where the employees have stockholder privileges without holding any stock (!) and the closest equivalent might be a “democratic” Employee Stock Option Plan (ESOP). It does provide, without question, far more worker participation than any business outside of the British co-operative community.

To have both major parties in Great Britain vying over schemes of worker participation elevates the concept to the popularity attained in the 70’s, when several thousand small worker co-operatives blossomed in the contentious political terrain of that era, also a period of economic decline. When the Conservative Party came into power it de-funded the Cooperative Development Agencies that Labour had created to aid this new economic sector. Without the necessary professional help the fledgling worker co-ops declined to the point that today fewer than 400 exist. Unlike in the US, where agriculture and energy are the major players in the co-operative sector, in the UK, the Co-op Supermarket dominates. And that network is huge. In fact, it’s the world’s largest consumer-owned business, with over 4.5 million members and 123,000 employees.

It’s interesting to note that UK’s largest worker co-operative, with 130 members, also functions in the food sector. Suma, a food wholesaler wholly managed by its worker force, supplies organic and fairly traded food to co-ops and natural foods stores. Despite its size, Suma proudly maintains its founding vision: it combats hierarchy by paying all members the same wage, and it encourages job rotation.

Something is rotten in the United Kingdom

Both the Conservatives and Labour recognize that the economic collapse, coupled with a House of Commons scandal over expense account fraud affecting members from all parties, has generated unprecedented popular anger. As in the States, the bank bailouts have been the focus for much of this anger, but unlike in the States, where at best we are encouraged to move our money to small banks, among the Brits a movement has grown to seize one of the largest banks, Northern Rock, and transform it into a community-owned bank.

Another aspect of the popular outrage in the UK resembles a growing hostility to large corporations that we see here. And for the same reasons: overweening political influence, off-shoring, growing inequality of wealth and severe cutbacks of wages and benefits. The “ethical deficit” of modern corporations has spurred universal condemnation.

The politicians in the UK, however, have created a clever way (they hope) of defusing outrage against the private sector by seemingly endorsing a radical response – worker control of the public sector. They are proclaiming a radical new kind of citizen participation as their answer to popular discontent and their lack of legitimacy.

It should be noted that for several years the British have been re-structuring both health-care services and education through community and staff collaboration. These efforts, called Trusts (and sometimes referred to as “Mutuals” share similar characteristics to multi-stakeholder co-operatives), have been somewhat successful in eliminating bureaucratic overreach and streamlining operations to better serve the public. And they have been financially successful; they have saved the government money.

Co-opting popular outrage

While the two major parties ostensibly endorse these new management arrangements in hospitals and schools, they nonetheless do have rival brands of “citizen control” on offer. The electoral circus must appear as a contest between rivals for votes, after all. Here’s what’s being proposed, first by the Conservatives and then Labour.

Based on the ideological premise that Labour’s statist approach to public services, mainly in education and health-care produces inefficiencies and waste, the Tories propose to have state-funded services managed by their staff. They actually have called for “worker co-operatives” and, further, that the staff would pocket any savings resulting from efficient operations.

Labour, on the other hand, offers a borough of London, Lambeth, as its model of public control of public services. Here the local council government experiments with volunteer community efforts. They point to a successful urban garden program, for instance, that the local council organized by hiring an experienced activist who organized 50 community gardens. Besides the gardens, her efforts to involve the community achieved a benefit that is commendable but can’t be easily tabulated. However paying one skilled community activist was a lot cheaper than hiring a crew of gardeners.

This same borough encouraged parents to petition to take over a local closed school and transform it into a community center, especially for after-school youth programs. And again the participants’ time was not calculated in the local budget and, of course, neither was the newly generated “social capital.” Labour seems to see this as a “problem” that can be addressed by offering local tax rebates to community members who participate in the volunteer projects.

Lambeth, not inconsequentially, is the home of a successful worker cooperative that may have been influential by its example of good management. Greenwich Leisure, was taken over by its staff in the 90’s when the cash-strapped Lambeth council could no longer maintain the services. Today the original leisure center has been replicated to include 70 facilities in thirteen London boroughs. While managed by the staff, these centers have community members on their boards to broaden involvement. This is the model that Labour seeks to adopt with maybe more community and less worker control. It differs from the Conservative’s proposal that seeks only the participation of staff, which many fear will eventually lead to privatization.

Again, once more, smoke and mirrors

Though innovative on the surface these proposals, by Labour and their “rival,” present some organizational (and political) difficulties that need to be considered.

Both parties advocate a form of participation that differs considerably from the worker cooperative model situated in the private economy. When public funds are the sole source of financing how much control will the staff actually possess? And what to do when funds are cut? Already the Lambeth council expects at least 20 percent less funding for 2010. And what about the physical plant? Will it be leased? Sold? Can the worker co-op institute its own for-profit ventures? And what will be the role of unions in all this? These and other “details” the Labour leader of Lambeth says will be discussed in commission hearings later this year.

Currently the Conservatives, in local councils that they control, propose to respond to funding cuts by charging for services above a minimum level. The wealthy, in other words, will move to the head of the line, a familiar scenario in the US. Or worse, they will be privatized, and we know what that means also.

So the Labour initiative on public services seems a wiser choice. It allows, in theory, for more local control by the users, the public, and the staff. If the follow-through reduces bureaucracy and top-down control, then this could be a positive development and mark a significant departure from the way public services are currently delivered.

Transforming the public sector to be more “user-friendly” is a worthwhile goal. But whether that goal will be met in the manner Labour, much less the Conservatives, are pursuing it seems dubious. The hallmark of co-operative ventures must be their democratic practice, without that we have just verbiage in tow to political gain. Something similar happened in the US during the discussion last summer about so-called healthcare co-operatives. No politician wanted local, democratic control of healthcare.

If the Borough of Lambeth were proposing something like participatory budgeting based on the extensive municipal practice pioneered in Brazil, where citizens actually had at least a bit of control over some funds to improve services, then maybe the goal of true community involvement could be attained. But without a radical revision of how local government allocates resources, especially in a time of austerity, enticing local community support with monetary perks, as has been suggested, risks creating a claque of self-interested locals who, for whatever reason, pursue their agenda instead that of the community.

Civic engagement occurs for many reasons that need not entail comprehensive, centralized administration. The joy of working on a worthwhile project with one’s neighbors needs little stimulus from some bureaucrat in an office someplace. Encouragement to engage in larger projects is needed. Who will entice strangers to collaborate, so that they cease being “unknowns” and successfully engage in pursuit of meaningful activity? Having access to real power, the goal of participatory budgeting, may be the possible institutional avenue towards reviving civic life by creating significant, practical change people easily recognize.

Diverting the focus from the private economy to the public realm appears to be a pretty transparent attempt to change the subject. One suspects that both Labour and certainly the Conservatives have no idea how to salvage an economy that has been devastated by more than twenty years of neo-liberal practices. The UK for instance has lost manufacturing on a scale similar to the US. The recent Cadbury Chocolate take-over by Kraft Foods was just the last episode in a recurring story. The trade unions anticipate huge cuts in the 7,000 jobs so that Kraft’s heavily indebted exposure is repaired.

The recent closing of the only large turbine facility in Great Britain by its Danish owner without a response exposed Labour’s inability to think creatively about retaining manufacturing.

Creating a co-operative economy

While the politicians prepare their circus acts, the real news on economic matters in Great Britain comes from Scotland. There, a four year-old co-operative development group is successfully establishing employee-managed firms. This group can advise for a range of alternatives, from start-ups to employee buy-outs of firms ready for transition of ownership. Scottish government development funds finance them and over the years they have assisted a host of thriving firms and have gained valuable experience creating ventures that provide for economic sustainability.

If Labour (or the Conservatives) really wanted to tackle economic development and not simply pose with a half-baked idea, they would fund replications of Co-operative Development Scotland in all major British cities. This act alone would not solve all the problems of an economy facing the worst prospects in generations, but it is at least a start. It would be a real demonstration that there are alternatives to another financial bubble economy. And it would place the focus on local economic development as the prime response to strengthening initiatives to deal with climate change and food security issues.

Funding local co-operative development agencies should also be considered a viable program for the US to adopt. The Obama administration has restored Bush’s cutbacks to the Cooperative Rural Development Grant Program, and in the current budget will double its funds. This granting program has proved effective in strengthening rural economic development. The next step would be to create an urban equivalent maybe modeled after the Dept of Commerce Minority Business Development Agency. Co-op projects already underway in the Bronx, Cleveland, Detroit, Milwaukee and Chicago, to name the most prominent and recent examples, demonstrate the viability of this approach. Isn’t it time for the federal government to recognize these accomplishments and fund more of them?