Rob Killick, 12 October 2010
The cooperative movement has been around in one form or another for centuries, both in the UK and elsewhere. Its heyday was in the late nineteenth and early twentieth century, and it now plays only a peripheral role in modern life. The most generous estimate of ‘employee owned businesses’ is stable at around 2% of GDP. Why then has there recently been a sudden resurgence of interest in common ownership?
In the past, small producers and working class people joined together in producer and consumer cooperatives to defend their interests in the face of a chaotic capitalist system dominated by big business. In addition, common ownership was seen by some as part of a peaceful and gradual move from the market to a more socialised economy. Even today the Cooperative Party, as an ally of the Labour Party, returned 28 MPs to the current parliament under the joint title of Labour and Cooperative candidates, including Ed Balls, one of the defeated leadership candidates.
But the current enthusiasm for common ownership does not come from those sectors of society who have traditionally seen common ownership as some kind of limited defence against capitalism, but rather it comes from within society’s elite. Indeed, even David Cameron is said to be keen on promoting common ownership as part of his ‘Big Society’. In other words, it is not a grassroots movement as it used to be, but more a top down strategy developed within the elite and proposed as part of government policy through state ‘empowerment’.
There are some critics who see some of the discussion of common ownership as an attempt to offload the responsibility for social provision from the state on to other sections of society. The proposals for more common ownership in the in the area of social services, for example, are in this view a cynical attempt to justify cutting state provision of social services as part of deficit reduction. While it is true that there is a congruence between arguing for a smaller state and the reduction of public spending it would be wrong to think that fiscal issues alone are at the heart of the common ownership revival.
The broader problem which common ownership proponents are trying to address is the overall loss of dynamism of British society and the consequent loss of authority of those who are running it. This crisis of authority is most evident in politics but operates throughout society. It has prompted a search for new ways of engagement between leaders and led. The recession gave extra impetus to this but was not the initial cause.
The elites who run Britain are faced with a tremendously important paradox, that capitalism is both unpopular and unchallenged. Its unpopularity means that large sections of society oppose those elements of capitalist society which are the most positive, economic growth and human control over the environment. The fact that it is unchallenged, in terms of any alternative, leaves the mass of society powerless, passive and apathetic. The elite search for resolutions to these problems has created pressure to find new ways to engage with and incorporate larger sections of a disaffected and cynical populace.
Does any of this matter when considering the pros and cons of more common ownership in our society? After all, arguing against the idea that people should have more ownership and control over their lives would appear perverse. What democrat could be against more democratic control?
William Davies in his Demos pamphlet Reinventing the Firm, which focuses on the private sector, and Philip Blond, whose ’the Ownership State’ is about the public sector are the two weightiest contributors to the current debate. Davies argues that there are 4 interlinked reasons why common ownership has become important today:
1. The banking crisis;
2. The longer term crisis of the UK economy;
3. The crisis in public spending;
4. The moral crisis of consumer capitalism.
According to Davies these four crises all point towards a new model of social ownership.
Common ownership cooperatives can take many forms, with differing levels of ownership and control. The best known, John Lewis, has a structure which rewards staff out of profits, but offers only limited control over major decisions. There is some evidence that employees in firms with an element of common ownership identify more with the business and exhibit greater job satisfaction.
However, a major problem with private sector cooperatives from the employee point of view is that they offer no extra guarantee of stability or job security. Cooperative businesses enter the market in the same way as any business and are subject to the same market pressures and to the laws of profit. If they do not comply with these laws then the businesses will fail alongside their non cooperative competitors. This kind of failure was the fate of many of the workers cooperatives set up in the 1970s, such as the Meriden motor cycle cooperative formed out of the collapse of Triumph.
Normal shareholders have the option of selling their shares if they sense the business is failing. Employees do not have that option. Employees may be better off without the extra worry that the equity they have in the business, along with their jobs, can disappear if the business fails. This is especially true if the ownership is separated from effective control of the company. The danger here is that shared ownership becomes shared sacrifice.
Philip Blond points to the advantages of common ownership in the provision of social provision as being better productivity and better services. He locates his argument within the context of a decay of civil society. In that sense his argument is attuned to Cameron’s view that the solution to the crisis in the public sector is the ‘Big Society’, the rebuilding of civil society as a buffer between the impact of the recession and the needs of ordinary people.
Leaving aside for the moment the economic imperative for cuts in spending is there anything positive about the ‘Big Society’ in this regard? There is something positive about community initiatives which bring together people to pursue local objectives, such as school improvements or community run nurseries for children. Calling this the ‘Big Society’ does not seem to me to make much difference. The people who do this will do it anyway and everybody else will continue their normal lives. The main way that this would change is if the provision of social services outside the state becomes a necessity, in other words if existing provision is taken away.
Any argument for changes in the way that social provision is made which begins from the premise that there will be less rather than more resources available would tend to have an inherent austerity dynamic to it. Of course, just because something is cheaper does not necessarily make it worse. There is an inbuilt tendency for production goods, tvs etc, to get cheaper but without any loss of quality. Perhaps both businesses and services can become better and more efficient through the adoption of cooperative principles.
Measuring productivity in the public sector is a highly contentious issue. Philip Blond makes a lot of the Office of National Statistics’ estimate that productivity in the Public sector fell by 3.4% in the past 10 years compared with a rise of 27% in the private sector over the same period. Just quite how you measure or compare the productivity of a factory worker with that of a teacher escapes me. The commodities that a factory worker produces get cheaper because it takes less labour to produce them. Are we saying that a teacher should be judged by how much they can cut the time they put into their pupils, or a doctor into the general care of their patients for that matter?
This is of course where the plans to cut public spending come in. The danger is that if we buy into the cooperative model for social provision, how long before we are told that the old and infirm need to be looked after outside of state provision, or that community soup kitchens should feed the unemployed rather than them receiving unemployment benefit? Philip Blond offers some justification for this view when he argues that common ownership can compensate for low pay in the public sector. He also highlights the fact that voluntary carers save the treasury £87 billion per annum.
The state provision of social services was the compromise outcome of a struggle between the aspirations of the working class for more security in their lives and the recognition by the ruling class that some measure of social welfare, usually provided at the cheapest possible level, was desirable for social stability and the maintenance of the workforce. The events of the past two years have shown yet again how easily capitalism can descend into chaos and how powerless individuals are to defend themselves when that happens.
Common ownership is an attempt to paper over the huge problems that our society faces. It is a paternalistic policy which at best can only affect the fringes of our society whilst having no impact on the central problem, the stagnation of our economy and of our society.
Rob Killick, CEO, cScape; author, UK After the Recession.
Rethinking Freedom in an Illiberal Age
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