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Labour's co-operative future

James Doran

After our party's loss of a parliamentary majority in the 2010 election, a debate started on

the political economy of last and next Labour government. In contrast to the beginning ofprevious periods of opposition, it has been without damaging splits and though differencesexist, there is much greater common ground. Through the course of the leadership contestand the new leader's first year in office, a consensus seems to have been reached on thesuccesses and failings of the economic model that prevailed before the global financialcrisis. The Labour Party can use its strong links with the the co-operative movement toregain the trust of voters on the economy.

From New Labour to Next LabourIn the context of the industrial strength of trade unions having been greatly reduced bymass unemployment and restrictive legislation, the Labour Party made a compromise with

corporate and financial power that had arisen virtually unchallenged during the years ofTory rule. This allowed the Labour Party, trading as New Labour, to win a largeparliamentary majority in 1997, and to sustain a record three full terms of office. Theintroduction of much-needed social-democratic reforms was welcome, but the compromisewith Britain's ruling class prevented the party from articulating a critique of power wieldedoutside of democratic structures. The dominance of the City meant tax revenues for publicspending throughout the UK, but it also led to the delusion that we were heading towards aweightless economy, that manufacturing industries did not matter as much as financialservices, and the problem of wage stagnation could be solved with increasedindebtedness (Turner, 2008).

The global financial crisis shattered the settlement with the British establishment,and some of the illusions about our economy: the banking collapse demonstrated that thestate was the last Few in the Labour Party would now disagree that the UK needs anactive industrial strategy, a reform of corporate governance in the financial sector, and anemphasis on responsibility throughout society. But as the Tory-led government hasembarked on a five year austerity plan, it seems as if the achievements of Labour in officecould be wiped away under the guise of creating a Big Society and rebalancing theeconomy. Vague rhetoric from the Coalition about using co-operatives to empower peopleis without credibility given the context of expansionary fiscal contraction an attempt toreduce the deficit with large-scale cuts but without an economic recovery. And rebalancingis only possible with the policies and funding that they are cutting.

Our economic policies have to offer hope because truth alone does not bring socialchange. Although industrial activism and corporate governance reform are needed, theydo not easily translate into the language of electoral campaigning; so it will not be enoughto assert that the Age of Austerity is an attempt to restructure the economy in the interestsof the few at the expense of the many. By drawing on our long-standing relationship withthe co-operative movement, and our sister the Co-operative Party, we can bettercommunicate our values, particularly in the seats Labour needs to win again and inregions such as the South East and South West of England (Carey-Dawes, 2011)

The potential of co-operationIn the 18th century, men like Robert Owen and William King provided the organisational

and ideological impetus to many of the early attempts at co-operative enterprise. Thewisdom of crowds has proved greater and more flexible than any Utopian scheme,ensuring the movement's survival.


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The co-operative and mutual enterprise (CME) sector has grown in public trust andpolitical support in recent years. In the wake of the banking crisis, mutuals became thebusiness model in finance that attracted the greatest support amongst customers, withrecord deposits in building societies and the credit crunch has led to greater awareness ofcredit unions. The shared prosperity of the Co-operative and the John Lewis Partnershiphas been in stark contrast to the skewed distribution of risk and reward in high finance and

big business in recent years. During the global recession, few co-operative banks, buildingsocieties, or credit unions, required state bail-outs like the investor-owned financial sector(Birchall & Ketilson, 2009). And research has suggested employee-owned businesses hada competitive advantage over other firms during the recession: the level of trust andmotivation generated by the model of ownership (Lampell, Bhalla, & Jha, 2010).

Activists in environmental campaign organisations, such as Friends of the Earth,view co-ops favourably because the economic participation of members of the communitydemonstrates that sustainable development in food and energy pays dividends. Allotmentassociations and community-supported agriculture give people access locally-producedfruit and vegetables; and communities involved in co-operative energy generation arebetter placed to deal with the growing problem of fuel poverty. Labour's current leader was

the energy minister in the last government and supported efforts to increase communityownership of energy assets, writing a foreword to the Co-operative Party's policydocument on the subject (Erbmann, Goulbourne & Malik, 2009).

What can be doneLabour should champion co-operation and mutuality as a good way of doing business:policies which promote the development of co-operatives in the private sector will ensurethat job creation occurs within communities, and that people can have more power in theirdaily lives. We are in a good position to do this in parliament now that the shadow cabinetcontains a number of Labour and Co-operative MPs, including the shadow chancellor EdBalls.

Our party could seek to fill the gap in legislation on corporate structures relating toemployee ownership, and potential exists for tendering processes for public contracts togive preference to firms owned by their workers (Erdal, 2011). In the longer-term, weshould give consideration to how co-operative models could be used to improve customerservice in utilities such as water and rail (Birchall, 2002; Wolmar, 2011).

In the broader labour movement, affiliated trade unions could follow the lead of theUnited Steel Workers in North America, which is working to establish private-sector unionco-ops in the US and Canada. In partnership with the Mondragon Co-operativeCorporation, the world's largest worker co-op, the USW intends to create good jobs,empower workers, and support communities (Davidson, 2010).

The coalition's plans for a Green Investment Bank demonstrates that state-backedinvestment banking is gaining acceptance within the British establishment. Labour couldadvocate the establishment of state-backed banks for regional economies with co-operative ownership a condition of lending (Zarb-Cousin, 2011). Incidentally, much-neededreform of the banking sector will only work in the long-term if the question of moral hazardis resolved: monetary reform is required to close the loophole allowing private financialinstitutions to avoid paying the Bank of England for electronically-created credit (Dyson,Greenham, Ryan-Collins & Werner, 2010).

Labour should be vocal about the role of housing co-ops and mutuals in buildingmixed and resilient communities. European countries with higher levels of equality andwell-being than the UK have a much higher percentage of their housing supply owned or

controlled by democratic associations (Bliss, 2009). A co-operative housing body could beestablished to create a more affordable private-rented sector, such a commitment wouldshow voters that Labour is in tune with worries about rising rents and the receding hope of


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home ownership (Clarke, 2011).For the next few years Labour will not be in a position to lead at a national level, and

if the coalition lasts until 2015, it will be in local government that the party will be able toprove itself to the electorate. In the local elections on May 5th, Labour performed well,regaining control of a number of councils but large-scale funding cuts from centralgovernment will mean Labour councillors face years of difficult decisions and a struggle to

maintain a positive impact with dwindling resources. In response to this, and the risinginterest in co-operative enterprise in the wake of the global financial crisis, the Co-operative Councils Network has been established and is being run by the Co-operativeParty to enable Labour councils, and Labour Groups in opposition, to share power withpeople (Grant, 2011).

It seems that across the Labour Party there is enthusiasm for a more co-operativefuture. But the question must be asked: if CMEs are capable of combining economicefficiency and social justice, why are they not more prevalent? The answer to this issimple: power. And this is why co-operativism is no easy ride: co-operation has alwaysbeen viewed with suspicion by those with financial and economic power, preciselybecause democratic member-owned businesses pose the threat of a good example. If we

want to put power in the hands of the many, we have to again understand the powerpossessed by a few.

References

Birchall, J. (2002)A Mutual Trend: how to run rail and water in the public interest, NewEconomics Foundation.

Birchall, J., & Ketilson, L. H. (2009) Resilience of the cooperative business model in timesof crisis, International Labour Organisation.

Bliss, N. (ed.) (2009) Bringing Democracy Home, The Commission on Co-operative andMutual Housing.

Carey-Dawes, D. (2011) Why Co-operative solutions should be at the heart of Laboursrevival in the South [http://www.southernfront.org.uk/2011/07/why-co-operative-solutions-should-be-at.html].

Clarke, E. (2011) Co-operative Housing: 100,000 not for profit rental homes a yearavailable to those currently renting privately, The Green Benches[http://eoin-clarke.blogspot.com/2011/05/100k-co-op-homes-over-18-year-period.html].

Davidson, C. (2010) U.S. steelworkers plan to experiment with factory ownership, TheCCPA Monitor, Canadian Centre for Policy Alternatives

Dyson, B., Greenham, T., Ryan-Collins, J. & Werner, R. A. (2010) Towards a Twenty-First

Century Banking and Monetary System: Submission to the Independent Commissionon Banking, New Economics Foundation & Positive Money.Erbmann, R., Goulbourne, H., & Malik, P. (2009) Collective Power: Changing the way we

consume energy, The Co-operative Party.Erdal, D. (2011) Beyond the Corporation: Humanity Working. The Bodley Head.Grant, P. (2011) The common endeavour of the Co-operative Councils, The Co-operative

Councils Network [http://www.councils.coop/2011/07/26/the-common-endeavour-of-the-co-operative-councils-cllr-paul-brant-liverpool/]

Lampel, J., Bhalla, A., & Jha, P. (2010) Model Growth: Do Employee-Owned Businessesdeliver sustainable performance?[http://www.johnlewispartnership.co.uk/content/dam/cws/pdfs/Resources/Model_Growth

_Employee_Ownership_Report.pdf]Turner, G. (2008) The Credit Crunch: Housing Bubbles, Globalisation, and the Worldwide

Economic Crisis, Pluto Press.
http://www.southernfront.org.uk/2011/07/why-co-operative-solutions-should-be-at.htmlhttp://www.southernfront.org.uk/2011/07/why-co-operative-solutions-should-be-at.htmlhttp://eoin-clarke.blogspot.com/2011/05/100k-co-op-homes-over-18-year-period.htmlhttp://eoin-clarke.blogspot.com/2011/05/100k-co-op-homes-over-18-year-period.htmlhttp://eoin-clarke.blogspot.com/2011/05/100k-co-op-homes-over-18-year-period.htmlhttp://www.councils.coop/2011/07/26/the-common-endeavour-of-the-co-operative-councils-cllr-paul-brant-liverpool/http://www.councils.coop/2011/07/26/the-common-endeavour-of-the-co-operative-councils-cllr-paul-brant-liverpool/http://www.johnlewispartnership.co.uk/content/dam/cws/pdfs/Resources/Model_Growth_Employee_Ownership_Report.pdfhttp://www.johnlewispartnership.co.uk/content/dam/cws/pdfs/Resources/Model_Growth_Employee_Ownership_Report.pdfhttp://eoin-clarke.blogspot.com/2011/05/100k-co-op-homes-over-18-year-period.htmlhttp://eoin-clarke.blogspot.com/2011/05/100k-co-op-homes-over-18-year-period.htmlhttp://www.councils.coop/2011/07/26/the-common-endeavour-of-the-co-operative-councils-cllr-paul-brant-liverpool/http://www.councils.coop/2011/07/26/the-common-endeavour-of-the-co-operative-councils-cllr-paul-brant-liverpool/http://www.johnlewispartnership.co.uk/content/dam/cws/pdfs/Resources/Model_Growth_Employee_Ownership_Report.pdfhttp://www.johnlewispartnership.co.uk/content/dam/cws/pdfs/Resources/Model_Growth_Employee_Ownership_Report.pdfhttp://www.southernfront.org.uk/2011/07/why-co-operative-solutions-should-be-at.htmlhttp://www.southernfront.org.uk/2011/07/why-co-operative-solutions-should-be-at.html


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Wolmar, C. (2011) Co-operative rail: a radical solution, Co-operatives UK.Zarb-Cousin, M. (2011) Mutually Beneficial, Progress

[http://www.progressonline.org.uk/2011/05/03/mutually-beneficial/]

James Doran lives in Darlington and is an active member of both Labour and the Co-operative Party. He is also involved with a local Friends of the Earth group, and writes ablog at http://hands-of-the-many.blogspot.com/.
http://www.progressonline.org.uk/2011/05/03/mutually-beneficial/http://hands-of-the-many.blogspot.com/http://www.progressonline.org.uk/2011/05/03/mutually-beneficial/http://hands-of-the-many.blogspot.com/

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