The problems implied by a reliance upon conventional market economics are well known: the way that wealth is sucked out of local economies for the benefit of remote shareholders and financial institutions; the way that the true environmental and social costs of commercial activity are externalised as much as possible onto poor communities and the state; the way that the needs of other stakeholders are subordinated to the over-riding requirement to maximise profit and ‘shareholder value’ for the providers of capital. Even the ethical credentials of trail-blazing socially responsible businesses such as the Body Shop are brought into question after the often short reign of visionary founders.
What is the answer? Well, I want to claim that at least part of the answer lies in promoting the development of Co-operative Enterprises. This unique model of business overcomes many of the issues highlighted above through a set of values and principles which enshrine democratic control by the real stakeholders who own these businesses – employees, service users, or some combination of the two. In that old socialist saying, Co-ops are a very real way in which ‘labour’ hires ‘capital’ rather than the other way round.
After allowing for re-investment in the business and a limited return of interest on members’ financial investment, any surpluses are either distributed in a fair and equitable manner (as a bonus to labour, or a dividend on purchases), or used for the benefit of the community. Wealth is anchored in local communities and controlled by local people.
Unlike state controlled enterprise and command economies, Co-operatives can respond to their members needs swiftly and flexibly; they can begin to develop new markets before they are profitable enough to interest private companies, and can address sectors where the market fails such as the provision of care services to the elderly and young people.
Its no accident that ethical trading and co-operative structures go hand in hand; providing for the ‘Economic, social and cultural needs and aspirations’ of their members has always been what co-operation is about – from the Rochdale Pioneers in the 1840s, to the Wholefood Worker Co-ops of the 1970s and 80s, to the Co-operative Bank’s ethical policy in the 1990s. Today, wind-power pioneers Baywind Energy, bio-diesel business Sundance, and many businesses in the organic, fair-trade and local food sectors are structured co-operatively keeping wealth, ownership and control firmly rooted in the hands of local communities. Alongside them, giant businesses such as the Co-operative Group (owned by its customers), and John Lewis/Waitrose (owned by its employees), also remain true to their founding vision and continue to be leaders in ethical approaches to trade.
However, much of this success does not receive the attention it deserves. How many people know that to qualify for Fair Trade status, producers in developing countries are often required to be organised co-operatively, and that the leading retailers of fairly traded goods across the world are themselves also Co-operatives?
Co-operatives form a large sector of the economy both domestically and around the world. In the UK, Co-operatives UK estimates that Co-operative enterprise contributes at least £22billion per annum to the economy. Globally, the top 300 Co-operatives alone are worth US$ 1Trillion a year in turnover – equivalent to the GDP of Canada.
If we are to have a future as individual people, as communities, and as the whole world, we must recognise the value of the Co-operative model of doing business in building a more just and sustainable economy and society for everyone.
For further information, see:
Richard Bickle, writing in a personal capacity, is a Research Associate at the Wales Institute for Research into Co-operatives; Secretary of the UK Society for Co-operative Studies; and a Director of Co-operatives UK.
This article first appeared in the Ecologist March 2007