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Issue 273
July/August 2012
Emerging Networks

Undercurrents

The Cooperative Moment
by
Illustration by Linda Scott www.lindascott.me.uk

Illustration by Linda Scott www.lindascott.me.uk

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The Cooperative Moment

In the age of failing globalisation, cooperatives are the microcosms of a more stable and resilient economy, writes Robin Murray.

Extreme weather events have tripled since 1980. There is a sense in which these parallel what is happening in society. Just as tornadoes, floods and firestorms sweep away all that is before them, all that is familiar – houses, roads, even threatening whole towns and cities – so the last 30 years has seen the erosion of the pillars that provided stability to 20th-century society.

It is not just the ever-gathering attacks on the welfare state and its sense of social solidarity. It is the weakening of so much that once shaped values and identity and provided the norms for personal relationships. All these have become less rooted, more diverse, and provisional. The Polish sociologist Zygmunt Bauman described it as a shift from solid to liquid modernity.

Central to this shift has been an increasingly faster and more liquid economy. Money now moves round the world in milliseconds. Fashion cycles are shorter. The rise and fall of companies is more rapid, their location more fluid. In the labour market the part-timer, the temp and the short-term contract are the forms of employment of a new ‘precariat’, constantly on the move between jobs, between places, and increasingly between countries. Mobility is a marker. Today 300,000 passengers are in the air above the US at any one time. International passenger arrivals have just reached 1 billion annually.

This global fluidity has been promoted by what the Hungarian political economist Karl Polanyi called “market utopianism” – a framework of thought that divorces the economy from society. As an ideology, like money it has become global and has come to dominate the way society is thought about and discussed. It has also become the primary shaper of social and economic policy.

Free-market ideas that were originally part of the Enlightenment’s attack on the landed absolutism of the 18th century have now been turned to defend the new corporate absolutism of today. Those institutions that more than 100 years of active politics put in place to contain and direct the force of a corporate market have one by one been dismantled as fetters to this force. It has been a dismantling undertaken in the name of freedom and efficiency. But the result has been the freedom of the few, and an efficiency that threatens to turn itself against its people and its planet.

Cooperation in its principles and its daily practice is based on a quite different set of values. As a movement it developed in the 1840s as a counter to an earlier period of market utopianism. It was a movement of those marginalised by the market, their alternative designed explicitly to stand the principles of capitalism on their head. As the Rochdale Pioneers put it when they established their first shop, instead of capital employing labour as it did in the new mills that had put these weavers out of work, labour would employ capital, and the cooperative would operate in the interest not of profit but of each and every one of its members.

The principles and structures developed by the Rochdale weavers then underpinned the rapid expansion of cooperatives in 19th-century Europe. They are still the core of cooperative principles and the reason for their contemporary relevance. For cooperation’s strengths are in those very things where market capitalism has been weakest: a commitment to places and communities, the desire for autonomy and meaningful work, the reintegration of the economy with those social and environmental values that have no voice in the market, and above all the subordination of finance to production and to those wider values. In today’s liquid globalisation, cooperatives are the microcosms of a more stable and more resilient economy.

Take first the commitment to localities. Cooperatives exist to serve their members. If those members have roots in a place, so does the co-op. Retail co-ops, for example, invest not in expanding to another cooperative’s territory, like a Tesco or a Walmart would, but rather in extending the services within their own. They dig deeper rather than spreading wider. Wherever you go in the world, you will find that a retail co-op that is controlled by its members follows this principle.

Recently I accompanied a group of cooperators from Korea to visit the Midcounties Co-operative, a UK consumer cooperative that stretches from Oxford down to Swindon, across to Gloucester and up to Worcester. We stopped at the Co-operative store in Chipping Norton, started in 1869 by workers at the town’s woollen mill, and still the main food store in the town. From the beginning it was a success, yet in spite of being asked to open up elsewhere, it remained local. The workers set up a bakery and other local businesses, including a drapery. They bought farms to grow their own food and built whole streets of affordable houses for their members.

Faced with competition from the large supermarkets, they merged with neighbouring co-ops to become Midcounties. The expanded co-op retains the same principles. The farms are gone, but the society helps incubate local producers. It runs pharmacies and funerals, and has added 70 post offices and a network of childcare co-ops. And a year ago Midcounties again invested locally, setting up an energy co-op that purchases electricity from cooperative wind farms and other renewable sources to provide energy at stable and affordable prices. From the Channel Islands to Shetland, and from Lincoln to Ipswich and the south coast, there are similar retail co-ops – respecting their own boundaries and investing their surpluses locally.

Workers’ co-ops work in the same fashion. They do not shut down and move to areas of cheaper labour or lower taxes. Their commitment is to their worker members and to the place where they live. And it is this (not short-term profit prospects) that guides their investment. The same goes for farmers’ co-ops and credit unions, for housing co-ops and community land trusts.

There is a vivid phrase used by the women who have grown the remarkable Seikatsu Club Consumers’ Co-operative Union, a federation of 30 consumer cooperatives in Japan. Based on micro-groups of 10–20 people knitted together into wider webs that connect more than 300,000 members, they say that they want to “take action from home”. The Club’s motto is “Autonomous control of our lives”, and it is the search for this control that, I think, explains the current revival of cooperatives. It is the striving for Gandhi’s swaraj (‘self-rule’), and we can see it surfacing everywhere in reaction to the unruly surge of globalisation.

The rise of fair trade over the past 20 years is one example, uniting as it does small farmer cooperatives in the South with ethical consumers in the North. The remarkable ‘recovered factories’ in Argentina are another; these were rescued by their workforces and local communities from the devastation that followed the country’s economic collapse in 2001.

Here in Britain, co-ops for social care and for schools have been formed, part of a movement to ‘recover’ public services that are passing into the control of private chains. The growth of cooperative schools is particularly striking. There are now more than 200 of them, run by parents, teachers, staff and others directly involved in the community. Not only do the schools embody cooperative values as their central ethic, but the children are encouraged to set up their own cooperatives, to run the tuck shop for example, or to organise events, or to help look after older people.

There are conditions for the success of all these varied types of co-op. They work best when their members have a strong interest and a sense that their voice (quite apart from their votes) counts. For this reason co-ops have been strongest when they have been small and inclusive, or when they have created larger units by consortia of small ones. They have to be able to call on the administrative and technical skills of those who share the enthusiasm. And perhaps most important of all, as Gandhi said, there has to be personal swaraj (‘self-rule’). Cooperation depends on the creation of cooperators.

From the beginning cooperation was always seen as a path for self-development – “being me and also us”, as one project put it. The Rochdale Pioneers wanted to devote 10% of their surplus to education, but were cut back by regulators to 2.5%. For many years British consumer co-ops ran their own courses and set up libraries. In 1919 they opened The Co-operative College, and the UK’s largest co-op, The Co-operative Group, continues to support this tradition. The celebrated Mondragon group of workers’ co-ops in Spain, inspired by the idea of humanised work, was described by its founder as “an educational movement that uses the methods of economics”. Of its four pillars – education, finance, social wellbeing and innovation – education remains primary, its university even more important than its bank.

Without these conditions, cooperatives can grow away from their members. They can become corrupted by size, and similar in daily experience to the corporations they were set up to challenge. The cooperative form cannot in itself produce its content. Rather it provides a structure within which swaraj can grow.

Unlike those of the stock-market-driven companies of today, the core principles of cooperation are to advance the interests not only of members but also of the communities within which they live. Economists like to talk about issues such as social welfare and inequality or climate change as ‘externalities’: that is, as values not reflected in the market. Co-ops try to internalise them.

One of the guiding principles is internal equity. Some co-ops, like Suma, an independent wholefood wholesaler and distributor based in Yorkshire, go so far as to pay all their 150 members equally. Others, like Mondragon, set a ratio between the highest and lowest paid. In Mondragon it is 1:9 across the whole group of 220 co-ops, but more like 1:4 in most of the individual ones.

Many co-ops develop their own mini welfare states, providing social insurance and pensions. The Seikatsu Club runs nurseries and care services for older people. Many of the small farmer co-ops set up clinics in their communities, and finance schooling. Then there are the gathering environmental issues that have been the drivers for many of the new wave of cooperatives – from food to recycling and the many forms of renewable energy.

How to balance these multiple objectives? Midcounties try to do this by having a circle of 16 different dimensions – all of which they discuss, plan and monitor as they might a solely financial target. Their primary goals (and 52 social and environmental targets) run from fair trade and local purchasing to smart metering and hydropower investments. As an open co-op, they have made their resources and know-how available to support local organisations. All employees are also allowed three days of working time a year to volunteer in the social economy (whether working in schools, with Transition groups, or, as one example, with an Oxford wholefood cooperative employing people with learning difficulties). They see themselves as part of society, not as separate from it.

Capital is like Homer’s restless wolf that never runs out of hunger. It has to expand in order to continue to exist. Once labour employs capital rather than capital employing labour, cooperatives break the circuit. This is why the central principle of cooperatives of one person, one vote (regardless of capital contributed) remains so revolutionary. In productive and service cooperatives, money remains the servant not the master.

What then of cooperative banks? This is an extraordinary part of the story. They first took root in 19th-century Germany to provide finance for those bypassed by the commercial banking system. They received the savings of small peasant farmers, artisans and traders and lent them back to those in need of them locally. There are still more than 1,000 of them, with 13,000 branches (Lloyds Bank, by comparison, has 1,900 branches). Together with a similar network of 420 local municipal banks, they account for the majority of German retail banking and explain the success of the German Mittelstand – the small and medium enterprises that have been at the heart of Germany’s economic resilience. They are a working example of what the financial regulators have failed to achieve in practice: a banking system that supports production rather than feeds off it.

Because their funds have steered clear of the turbo finance of international financial markets, Germany’s local cooperative banks (like those in many other continental countries, and the UK’s Co-operative Bank) survived the storm of the past four years. They have even been recognised by the International Monetary Fund (IMF) as the most robust banks in Germany, though the IMF economists find it difficult to get their head round the idea that efficiency shouldn’t just be measured by financial profit, or that these banks see their assets not as capital to be maximised but as resources for the welfare of current and future generations.

At the heart of cooperative banking is the idea that it is social interest, not compound interest, that is important. This bears on the question of growth. The environmental movement’s call to end growth implies an end to money as ever-expanding capital. Cooperatives are a form of enterprise in which capital and its growth are no longer king.

In the 20th century, the joint stock company drove the revolution in mass production. Scale ruled and clubs were trumps. But the zeitgeist is now moving back towards human-scale and cooperation. The 21st century has seen a return to the micro, to self-governing units networked together as part of larger, complex systems.

Cooperatives have been experimenting with such collaborative systems for some 150 years. There is a wealth of experience of what does and doesn’t work, of the pitfalls but also the extraordinary economic and human value they generate when they get it right. They have been able to reconnect that which has become separated: the personal and the social, the consumer and the producer, finance and industry, the enterprise and its community, and at their best, in the spirit of William Morris, the head, the heart and the hand.

We are no longer at the stage of celebrating the fact that co-ops have managed to survive. Many are thriving. New ones are emerging. In a growing number of spheres they are showing that they are the adequate institutional form for a human-centred 21st-century economy.

In the poet Alice Oswald’s words, they are breathing new leaf into the woods.

Robin Murray was a co-founder and chair of the fair-trade company Twin Trading. He is currently a senior visiting fellow at the LSE and an Associate of Co-operatives UK.

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