25 November 2010

Can we really create a co-operative economy?

All the talk at the moment is about public service co-ops and mutuals. How the co-operative model would be great for driving up performance, lowering costs, but at the same time keeping these new businesses accountable and lets be honest ethical.

I agree with this generally and particularly if the employees get a real sense of ownership and control of their work life. But the question I'd like to ask Dave and George is: If its so great for the public services (especially in this time of budgetary constraint) why is it not a great idea for the rest of the economy and particularly those areas of high capitalism that got us into this mess in the first place?

I know a number of you must be thinking the same, in a recent SEC survey showed 2/3rds of people want more employee owned business in the private sector.

We are not the only ones who want to create a more co-operative economy either.  Fidel Castro at the other end of the spectrum admits Cuba's centrally planned economy is not working and worker co-operatives should be promoted.(I find it slightly bizarre that a communist and a Conservative could agree on a economic model.)

Some people like the Basques in Mondragon and Emilia Romagna in Italy have been creating a worker co-operative economy on a regional level for years. Hugo Chavez in Venezuela is also a convert:

"When he took office, there were 762 co-ops in Venezuela with 20,000 members. Many of these were more credit unions than worker-owned cooperative work places. By mid-2006 there were 108,000 co-ops with 1.5 million members with half in the service sector and a third in production.
More information on his Bolivian Revolution here and here.

So creating a worker co-operative economy is doable, but is it doable in the England or the US?
Well some in the US are giving it a try; the steel worker union of America is looking to partner with Mondragon.  There is also an experiment going on in Cleveland to create a Mondragon like network of co-operatives, the first group of co-operatives are focused around The Evergreen Co-operative.

So is it achievable in the UK and what could it look like?  
Co-operatives UK is releasing a paper (more of a tomb) written by Robin Murray who was heavily involved in the formation of the fair trade movement: Twin Trading, Cafe Direct, Divine Chocolate etc. Its called Co-operation in the Age of Google,

Co-operation in the age of Google shows that we are living at a time of profound transformation. The information and communication revolution, widespread concerns about private sector greed, public sector finances and impending climate chaos present a wide range of possibilities for co-operative expansion.

Robin argues the UK Co-operative movement is not yet in a position to make the most of these opportunities. It needs to be more innovative, more integrated, more internationalist, to get better infrastructure and to find ‘the idea’ that can mobilise support for co-operation. The review proposes a series of practical initiatives for 2011 and 2012 to strengthen the co-operative sector.

Have a read and in true co-operative style add your own comments, thoughts and ideas.

Another report released by MIT in October looks at Mondragon and the Evergreen Co-operative Model case study them and then create a theoretical framework for what creating a worker co-operative economy.

"The most important lesson from Legacoop and the Mondragon is the importance of developing an economically integrated network of cooperatives rather than a single cooperative."

I've added a diagram from this report as it sums up their framework.But do have a read of that too.

We live and vote in a country run democratically and we may well soon have a public sector run in a more democratic and mutual way.  Why should we not work in a business that is run in a democratic and co-operative way?

Wider Reading
Co-operation in the Age of Google (Co-operatives UK) 
Sustainable Economic Democracy: Worker Cooperatives for the 21st Century (MIT Co-lab)

11 November 2010

What is an employee owned co-operative?

If you work in a public service, you're probably asking the question: What is an employee owned co-operative? If you're an owner/member in a worker co-operative you might well be asking the same thing, but for a different reason; I'll get on to that later.

But first the answer:


Unsurprisingly its kinda in the title: An employee owned co-operative is an organisation owned & controlled by the people who work in it, that either consciously or unconsciously follows co-operative principles .

Ok what does that mean?

The first bit means: for it to be genuinely employee owned the employees should at a minimum control 51% of the voting shares or indirectly own the business via an employee owned trust (like John Lewis).  This ownership also has to be spread throughout the workforce, not just by the managers and come with a real sense of control over the business. Giving 10% of shares to employees is not an employee owned business.

You could just stop there and be an employee owned business, which is fine (damn site better than being investor owned), but I believe the bit that adds the real value (and makes it more palatable for me regarding public service delivery) is the co-operative bit.

You can read the internationally agreed Co-operative Principles here. But essentially they say that a co-operative is a business where:
  1. You can't be forced to be a member, and if you fit the criteria (length of service, commitment, etc) you can't be turned down.
  2. If your a member, you get a say in the running of the business and that say is equal to others not based on how much money they have invested.  (This doesn't preclude managers by any means, but does change the dynamic).
  3. You control the capital; you should also benefit from the performance of the business.
  4. Significant when it come to public services, as a business you should be independent, from the state or anyone else's influence.
  5. Members should be fully trained and supported so they can play a full role in running the business.
  6. Where possible you should co-operate with other co-operatives, to develop the whole co-operative economy.
  7. You should also have a wider concern for the community around you.
So if you're a public sector worker whose stumbled here I hope that helps. If you want to make an enquiry about setting up public services  mutual or employee owned co-operative click here. If you are interested in my own views on what model could help us create a big society click here.

My more regular readers might be asking, why I've essentially restated what a worker co-operative is. Why? because when you go on wikipedia, co-operative websites, or talk to people in the co-operative movement no-one really uses the term "employee owned co-operative".

In the US, Canada and UK we use the term worker co-operative, or if were really old-school "producer co-operative". As with most things in the English language the why has been lost in history.
The more pedantic people like me might argue that "worker" is technically a broader legal term than employee. But for most people the two phrases are interchangeable. (or are they? If you disagree please leave a comment)

I've heard grumbles that the use of this new term by Government and others is to distance these new entities from co-operatives of the past; or because "worker" sounds a bit too socialist for people's liking.

There are good examples of public service co-operatives out there.  But I do understand the need to look if exhisting models will fit and what these public service mutuals are going to really look like. Co-operatives UK provides a point for accessing information and signposting for people interested in starting a co-operative delivering public services. At the moment we are working with the Government particularly in relation to the Post Office.

And that's the real point of all this, what is being proposed by the coalition Government is going to break new ground, if public sector workers really are going to opt for some sort of mutual / employee owned co-operative model then they probably will be different from the worker co-operatives we have at the moment.

But if they share enough of the same characteristics, they are going to be dealing with the same issues worker co-operatives face.  How can we pass on our learning, and what can we learn? What are the opportunities (or threats) from some potentially massive new worker co-operatives that could easily dwarf the existing worker co-operative economy in the UK.

I'll end by saying; you can’t bluff it; if you say something is a co-operative it has live up to it. If its called employee owned, it has to be genuinely owned and controlled by those employees.

This is something I'd really like your comments on both from worker co-operatives and those in the public sector trying to understand how this might work for them.

Wider Reading:
Demos - John Lewis vs easyCouncil
Respublica - Turning public servants into service partners