Mainstreaming co-operation

An alternative for the twenty-first century?

Anthony Webster, Linda Shaw, Rachel Vorberg-Rugh

• Publisher: Manchester University Press
• Year: 2016
• ISBN:
  9781526101006
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Negocios en general

This collection considers the transformation that has taken place over the last thirty years in the global position of co-operative and mutual business models, from the prevailing view of the investor-led model in the 1980s to the aftermath of the 2008 financial crisis and revival of the co-operative movement.

1

Introduction

Anthony Webster, Linda Shaw and Rachael Vorberg-Rugh

Early in July 2012 academics and active co-operators from across the world converged on The Co-operative Group’s then headquarters at New Century House in Manchester, UK, to attend a major international conference entitled ‘Mainstreaming Co-operation’. The theme was how co-operation internationally could renew itself and become once again the global force for positive economic and social change it had once been in the later nineteenth and early twentieth centuries. The central question was how co-operation could move from the fringes of orthodox economic, social and political thought to command a prominent position in the mainstream intellectual currents of the day. The conference was interdisciplinary, and focused on a wide range of historical and contemporary issues and themes in which co-operative models offered or had offered new ways of organising production, commerce and human society which became widespread and central to the wider functioning of societies.

The time for such an appraisal seemed particularly apt. In the later twentieth century co-operation as a business and social model had experienced retreat and defeats, especially in parts of the developed world which had been, a century or so earlier, the citadel of co-operative growth. This was especially evident in the field of consumer co-operation. Across Western Europe, in particular, consumer co-operative movements had lost market share to new investor-led and ruthlessly efficient and centralised retail chains, able to take advantage of large amounts of capital raised through the stock markets, and unhampered by the constraints of federal, regionalised business democracy which prevailed within the consumer co-operative movements.¹ In countries such as Austria, France, Germany and the Netherlands, major parts of the consumer movement were swept away in the 1980s and 1990s, while elsewhere, notably in Italy and the Scandinavian countries, strategies were adopted which enabled those movements to hold their own.²

In Britain, decline from the 1960s to the 1990s was arrested by new approaches in the first decade of the twenty-first century, but recent setbacks have resulted in all of the ground recovered being lost.³ Accompanying business difficulties, consumer co-operation experienced membership declines in many countries, weakening the democratic credentials of the movement, and in some cases ultimately leading to loss of co-operative status and conversion to mainstream investor-led models, as occurred in Germany in the 1980s. But perhaps even more damaging than this was an ideological assault on co-operation which led to a widening perception that it was a form of business and social organisation whose day had passed. The 1980s saw the establishment of a new ‘neoliberal’ intellectual hegemony in politics, economics and business, exemplified by the Thatcher and Reagan regimes in the UK and USA. This dismissed the mixed-economy ideas of the postwar Keynesian consensus, and reasserted the free market and competitive ethos of nineteenth-century capitalism, with its emphasis upon a small noninterventionist state, low taxes, minimal welfare and the dominance of the investor-led public limited company (PLC) or corporation as the only really credible and durable form of business organisation.

The ‘new’ philosophy was intertwined with globalisation, financial deregulation and the development of a dizzying array of new financial instruments and assets which, for a time, seemed to offer the prospect of efficient, self-regulating financial markets which did not need the intervention of law or national state agencies. In this brave new world, co-operatives came to be seen as outmoded forms of business enterprise, destined to lose out to the investor-led paragons of economic rationality. Co-operatives might emerge to plug temporary gaps yet to be filled by superior investor-led models, but in the long run they would cede to the natural winners in this neoliberal version of economic Darwinism. This new orthodoxy had real consequences. The privatisation of state assets found a mirror in the policies of demutualisation which swept across the Western world, with new legislation to empower management teams and other interested parties to lead the way in converting building societies and other mutuals into investor-led companies. In Britain, the 1990s saw the vast majority of building societies converted to mainstream banks, and some of those which did not convert mimicked the more reckless and speculative behaviour of the new converts in an effort to retain membership and market share – as The Co-operative Group was to discover to its bitter cost following its absorption of the Britannia Building Society in 2009.⁴ Meanwhile, the collapse of communism in Eastern Europe and the former Soviet Union added to the discrediting of the co-operative model, as many of the ‘co-operatives’ in those regimes had been either absorbed into the communist state apparatus or set up by them. Thus neoliberal economic theory, combined with the failure of communism, served to inflict one of the greatest blows against the international co-operative movement in its history.

By the early 1990s, therefore, according to the mainstream of contemporary economic thought, co-operation was a dying form of business and social organisation.⁵ Economic theorists wrote of numerous theoretical problems with co-operatives: the so-called ‘horizon problem’, in which individual co-operators struggle to put the collective interests of their co-operatives before their individual interests in the arena of long-term investment in the business; or the ‘Illyrian problem’ (mentioned in Grant’s chapter 3 in this volume), in which members of co-operatives refuse entry to new workers in an effort to retain their share of the co-operative’s earnings. This leads to the development of two classes of workers in the co-operative – member owners and employees – a state of affairs entirely inimical to the ethical aspirations of co-operation, and likely to constitute a slippery slope towards conversion to ‘mainstream’ investor-led status. In this way a new orthodoxy emerged in which co-operation had little or no place. This was reflected in the gradual fading of co-operation from the literature in academic business studies and economics. This fading of co-operation from important parts of the intellectual mainstream remains a problem, as will be made clear later in this introduction and the chapters in this volume.⁶

Yet, unexpectedly, the tide did begin to turn in the first decade of the twenty-first century. The dominance of the investor-led model began to be challenged, largely as a result of crises and problems in the international capitalist system, but also because of signs of durability and revival in the international co-operative movement. Even during the supposed heyday of neoliberal orthodoxy of the 1990s and early 2000s, many social observers of the globalised and market-driven economy noted that the corollary of the system was deepening divisions of wealth and power between the very richest elite and the rest, with potentially damaging consequences for social order and democratic legitimacy. To some degree, the emergence of new-style left-of-centre ‘third way’ strategies, such as that advocated by the Blair government in the UK after 1997, seemed to highlight that other business models than the dominant corporate investor-led template deserved a place in the capitalist hierarchy. The Blair government even sought to legislate for such alternatives, through the Community Interest Company Regulations of 2005 and the Charities Act of 2006, which established a legal framework for community interest companies, charitable incorporated organisations and the growing body of ‘social enterprises’ dedicated to the creation of a business sector with a distinctive remit to improve and strengthen society.⁷ The warning signs that investor-led organisations were not without their weaknesses were evident when the Enron scandal erupted in the USA in 2001. This proved to be an ominous portent for the future, and when the great international financial collapse of 2008 occurred, with the failure of Lehmann Brothers followed by state bailouts of major banks across the world, shortcomings in the governance practices of investor-led companies and their underpinning structures began to move centre stage. As the crisis unfolded, an interesting phenomenon became clear. In countries such as Italy and France, co-operatives proved highly successful at riding out the storm, with co-operatives creating many more jobs at a time of crisis than the private sector (see Sanchez Bajo and Roelants’ chapter 2, this volume). In Britain, The Co-operative Group had been steadily recovering following the Lanica crisis of 1997 and its reorganisation in 2000–01, and was not proving to be the failure once predicted. Consumer co-operatives in the Scandinavian countries were also holding their own, with quite spectacular levels of success being achieved in Finland. In addition, in Britain, the ‘liberalisation’ of education from local authority control, which had been gathering pace for some time, created new opportunities for schools organised on ‘multi-stakeholder’ co-operatives lines, a model that had enjoyed considerable success in Italy.⁸ By 2015, over 700 such schools had been created through reorganisation or were in the process of converting.

There were also signs of ideological reassessments amongst political bodies not traditionally favourable to co-operation. In the UK the Conservative Party, once the architect of the demutualisation and privatisation drives, rediscovered the benefits of co-operatives, mutuals and social enterprises during its long period in opposition from 1997 to 2010. Problems with privatised public services and the spectacular failures of many demutualised building societies (especially in the 2008 crisis) persuaded some Conservatives that there was room, after all, for co-operatives, mutuals and other non-investor-led organisations to flourish – especially in public services from which the state would have to retreat, following the massive financial retrenchment resulting from the debts arising from the huge state bank bailouts of 2008–09. From this emerged the 2010–15 Coalition government’s ‘Big Society’ strategy, in which co-operatives, mutuals, social enterprises and other ‘third sector’ organisations were to ‘spring into being’ to take over key services (libraries, leisure centres, playschools) previously provided by the local state.⁹ The idea of a non-state, non-capitalist third sector emerging in the wake of the crisis also informed European Union strategy, with an important plank of its future plans defined as ‘social innovation’, with the object of increasing citizen participation in society and democracy via more direct engagement with the voluntary and social enterprise sectors.¹⁰

Thus the Mainstreaming Co-operation conference in 2012, which coincided with the United Nations International Year of Co-operatives (itself a sign of renewed global interest in co-operative models), seemed to catch a changing intellectual milieu on the brink of readopting ideas of co-operation and mutuality more or less rejected by the mainstream a generation earlier.¹¹ Notably, the original impetus for the international year came from the developing world, as Mongolia was the resolution’s original sponsor in 2009. The first wave of support for the resolution also came from the countries of the developing world.¹² After the resolution passed, Mongolia hosted the initial meeting of UN experts to plan for the year.¹³ The aim of the Mainstreaming Co-operation conference was to explore the possibilities of moving co-operative models of business and social organisation from the margins to which had been relegated, back into the mainstream of intellectual debate about business, social organisations, and the wider field of public and commercial ethics. It was recognised that while a new openness to such ideas was in evidence, this did not constitute a wider awareness of or acceptance that co-operatives and mutuals might have a continuous and substantial role to play in developed and developing societies. Business and economic textbooks remained firmly wedded to the investor-led business paradigm.¹⁴ The conference therefore explored how co-operative models had succeeded in the past in breaking down intellectual and political barriers, and had ‘won the high ground’ – often against entrenched, self-interested opposition. It sought to identify fields in which co-operatives were once again beginning to win ground – how they had achieved this, and what could be learned from it. The conference also focused on general strategies (historical and contemporary) for co-operation to win its place in the intellectual mainstream – and in fact changing that mainstream itself.

But no sooner had the conference happened, and the editors had set to work turning the conference proceedings into a publication, that events overtook them. The crisis in the British consumer co-operative movement, which began with the near failure of The Co-operative Bank in 2013, threatened to destroy all of the advances made since the difficult years of the 1980s. For a time even the survival of The Co-operative Group itself seemed in doubt. Realising that any book exploring the position of co-operation in relation to the mainstream which did not analyse the most recent and serious crisis in the history of British co-operation and its ramifications would be obsolete before it got into print, the editors decided to allocate a chapter to examine the roots and results of that crisis, something which had to await the completion of the major reviews of The Co-operative Group’s affairs undertaken by Sir Christopher Kelly and Lord Myners during the course of 2014, and the outcomes of their recommendations.¹⁵ As a result, a volume originally planned for publication in 2013 has taken substantially longer to produce. But we think that, in this case, it is a substantially stronger and more relevant volume for its extended gestation period.

So what are the main themes of the book? Firstly, the ways in which co-operative ideas have won support in the past, and clues as to how they might do so again in the future, figure very prominently. Here it is necessary to sound a note of caution. The aim is not to offer examples of successful and expanding co-operative practice as blueprints or approaches to be universally replicated. A resounding aspect of co-operativedevelopment has always been its adaptation to social and economic conditions which are specific to particular social, cultural and historical contexts. The editors reject the notion of a simplistic co-operative blueprint or approach as something which can be universally transplanted, and few of the contributors to this volume seek to proselytise specific models. Of course, it may well be that co-operators reading this book will draw their own conclusions and adapt ideas to local circumstances – but it is not the intention of the editors to actively campaign in favour of this or that model. Furthermore, the question of ‘mainstreaming co-operation’, in the sense of winning wider intellectual, legal and political acceptance of co-operation across the world, is not merely a question of developing successful models. Sanchez Bajo and Roelants’ chapter demonstrates that it is not merely a question of co-operation and mutualism adding to the mainstream of economic ideas and business models, but of their substantially changing many of the underlying assumptions behind the main-stream; not least in the replacement of the hegemony of neoliberal ideas and the investor-led organisational model with a plurality of models, in which a wide range of potential forms of organisation might coexist. They point to the continuing success of co-operative models during the post-2008 crisis in which ‘mainstream’ capitalist organisations struggled, offering the example of co-operatives such as Desjardins in Canada and Mondragon in Spain. On a similar theme, Grant, in chapter 3, pinpoints the central problem of how co-operative ideas might not only dominate in the intellectual mainstream, but also exercise greater purchase over the popular imagination. For him, it is a central question of agency, of how co-operative ideas might gather sufficient momentum to challenge neoliberal orthodoxies. For Grant, this requires the development of effective networks of co-operative advocates and institutions, able to promote co-operative ideas in a co-ordinated, self-supporting and coherent way. He points to the effectiveness of such networks in promoting feminist ideas since the 1960s, and how they have moved the interests of women into the mainstr...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Contents
• List of figures, tables and boxes
• List of contributors
• Acknowledgements
• 1 Introduction: Anthony Webster, Linda Shaw and Rachael Vorberg-Rugh
• 2 Mainstreaming co-operatives after the global financial crisis: Claudia Sanchez Bajo and Bruno Roelants
• 3 Our agencies: persuasion and the value of a concept to mainstreaming co-operation: Philip Grant
• 4 G. J. Holyoake (1807–1906): a resource for a journey of hope?: Stephen Yeo
• 5 History, citizenship and co-operative education, c. 1895–1930: Keith Vernon
• 6 ‘The unit of the co-operative movement … is a woman’: gender and the development of the co-operative business model in Britain: Rachael Vorberg-Rugh
• 7 A continuing challenge: women and leadership in co-operatives: Barbara Rawlings and Linda Shaw
• 8 The wasted years? The Co-operative Party during the 1930s: Angela Whitecross
• 9 New models of ownership and governance: Cliff Mills and Ruth Yeoman
• 10 Co-operatives in health care: global prospects for the development of co-operatives as instruments of consumer-centred health care: Vern Hughes
• 11 The re-emergence of the co-operative model for architects : Stephen McCusker
• 12 Co-operatives and climate protection: housing co-operatives inGermany: Carolin Schröder and Heike Walk
• 13 The co-operative identity: good for poverty reduction?: Rowshan Hannan
• 14 What do we really know about workers’ co-operatives?: Virginie Pérotin
• 15 The impact of the co-operative ethos on the creation of sharedvalue: a case study of Lincolnshire Co-operative Society: Phil Considine and Martin Hingley
• 16 Learning to swim against the tide: crises and co-operative credibility – some international and historical examples Anthony Webster, Linda Shaw, Rachael Vorberg-Rugh,: John F. Wilson and Ian Snaith
• Index