With both Labour and the Conservatives attempting to appeal to left-leaning voters by encouraging the use of co-ops to provide public services, interest in these once-fashionable methods of organisation has been reignited. But are they microcosms of the democratic society that we crave? Or do they hinder political change by taking people away from social movements and trade unions and into self-contained, competing and self-exploitative economic units? Workers’ co-ops clearly have massive advantages over authoritarian systems of workplace organisation – but do they have the potential to change the world?
Democracy
There are currently around 400 independent workers’ co-operatives in the UK, operating in a wide range of industries and employing approximately 2,000 workers. Each has its own unique structures and ways of organising. There are many other types of co-ops too – consumer and housing co-operatives, for instance – but it is workers’ co-ops in particular that some argue hold the potential to change the world. Researchers Betsy Bowman and Bob Stone, for example, make the lofty claim that networks of workers’ co-ops ‘could almost fully replace capitalism by a democratic economy’ (Grassroots Economic Organizing 2004).
This drive towards democracy is very outward looking and forms an integral part of co-operative thinking. Many critics of globalisation, who disagree on other matters, endorse some form of workplace democracy as part of any viable alternative to capitalism and it is the internal democracy of workers’ co-ops that set them apart from other organisational structures.
This democracy helps serve the needs of co-ops’ own workermembers, who are able to engage fully in the decision making process and therefore have a good degree of control over their everyday lives. This stands in stark contrast to other forms of workplace organisation where the boss, as the representative of capital, is very clearly in charge, and where profit comes first and workers’ needs figure marginally.
Dan Hassan of the Footprints and Thread Me co-ops and Radical Roots network explains: ‘We are set up to service the needs of the people who work here. The democracy is important as it allows you to work to a different logic. Personal and group development is also a big thing for me. It allows us to practice how we can work together with a focus on health and wellbeing, not profit.’
The public service co-operatives proposed by Labour and the Conservatives in their election manifestos are not the models of democracy referred to here. Instead these would be workerowned co-ops, based along the lines of the much vaunted John Lewis model. In this instance the workers have no direct input into day-to-day decision making, which is left to the bosses and middle management. Instead, in the John Lewis model, workers can ‘hold management to account, influence policy and make key governance decisions’ through a ‘partnership board’. The employees own the business through a trust and receive a share of the profits. Advocates of this less democratic system say that it helps the company deal with the rigours of the market while still allowing some worker participation.
Outside pressures
A strong and more democratic internal structure can also help a company to cope with the external pressures of global capitalism, however. It’s a question of meeting needs rather than seeking profit, with workers deciding together how best to cope with crisis. A good example would be across-the-board pay cuts taken to avoid redundancies or the shifting of workers from one co-op to another as in the Mondragón model.
But these outside pressures can lead to degeneration and limit a co-operative’s ability to hold onto its internal democracy. The degeneration argument says that due to the pressures of the market economy, the financial side of a business becomes the primary goal and democratic working methods fall away. Indeed the original Rochdale co-operative, founded in 1844, ‘degenerated’ when, to finance purchase of a new mill in 1859, it took on investor members. These outvoted worker members and in three years converted the co-op to a conventional firm.
One modern-day co-op that could fall into this trap is Ethical Consumer magazine. For 20 years it operated as a workers’ co-op, but last year changed structure to an industrial provident society, taking in outside investment and creating a board of directors.
But founder Rob Harrison feels that a breakdown of democracy is not inevitable. He’s confident about the future, explaining: ‘This is about more democracy not less. We are encouraging greater participation from stakeholders [the readership and NGOs, for example] while maintaining worker democracy through the constitution of the board, where the workers will always be in the majority, and the management committee, which is made up of all the workers, deals with the day to day running of the co-op.’
This change in structure also opens up the possibility of attracting more finance – especially important in today’s tough economic climate. A lack of capital is often a problem for workers’ co-ops but it has been solved in a variety of ways. The Mondragón co-op in the Basque region of Spain is self-financing through its own bank, Caja Laboral; in Canada there is the Quebec Federation of Labour Solidarity Fund; government loans help out in northern Italy, while in Brazil and Argentina experiments in participatory budgeting have provided funds for co-ops.
Potential for lasting change
So what of their potential to bring about social change? Co-operatives alone cannot end capitalism. However, they play an important role in demonstrating how people can act independently and autonomously on a daily basis. Some fear that unless people have this experience and a strong independent economic system exists, any political change will only result in a bureaucratic socialism. While elected governments are often short lived, moreover, independent co-operatives can last a life time.
The business academic John Luhman suggests that ‘workerownership can be an instrument for solidarity and social change, in that ‘it stimulates a social consciousness of activism’. He argues that ‘the democratic structure of worker ownership can enable a transformation toward a broader democratic culture’.
Trade unions
Worker solidarity is also important to bring about any lasting change but over recent years in the UK there has been little link-up between trade unions and the co-operative movement. In the 1970s unions actively used the co-op model to try to rescue businesses that were failing. This experiment itself failed, but arguably the companies’ problems were deep rooted and a change in structure was not enough to save them, so this was no reflection on the co-op model.
Both the co-operative movement and the trade unions are well represented in the Labour Party and both were instrumental in achieving labour representation in parliament. ‘You have to look at the history,’ says David Coulter, deputy chief executive of Co-operatives UK. ‘Unions, the Labour party and co-ops all started out in response to the conditions brought about by the industrial revolution. They were a reaction to exploitation, a lack of democracy and poor working conditions. We are all in essence working for the same thing but in different ways.’ The potential for an alliance with the Labour Party to bring about social change is clearly open to question, however.
Robin Murray, currently working with Co-ops UK, believes that unions and co-ops together can now play a key role in helping to shape the proposed co-operative initiatives from the mainstream political parties. It is clear that there has been antagonism over co-ops providing services traditionally offered by the state, with the unions seeing it as privatisation by the backdoor. But Murray believes that the current post-crisis climate offers the chance for real engagement between the co-operative movement and unions.
He believes that public-social partnerships, as opposed to public-private partnerships, are a good way forward and multi-stakeholder partnerships offer great potential for union involvement. He says that New Labour’s idea to mutualise areas of market failure, such as waterways, football clubs, pubs and local shops, offer a chance for real collaboration between the co-operative movement and unions. Unions, however, must look at ‘how these can be joint projects’ that are strong enough to ‘help guard against policy change’.
Rob Harrison of Ethical Consumer makes the point that on an individual level in his organisation, links with the unions have been strong, with many workers joining the NUJ. This was partly due to people’s freelance work, he says, but also demonstrated that those within co-ops ‘understand the need for solidarity’.
Social movements
This sort of individual commitment is also at the heart of workers’ co-ops’ interactions with social movements. According to Katy Brown, a campaigner and workers’ co-op member, ‘There are not formal links but on an individual basis there is often a transfer of skills between the two. This is especially the case with decision making, where co-ops provide a good platform to learn about non-hierarchical decision making. It’s a mutually beneficial relationship.’
Dan Hassan agrees. ‘All the people who are involved with our co-ops are involved in wider social movements. The co-op opens up a common space to allow you to provide for yourself but the flexibility to engage in and explore other avenues [such as] social justice and local community activism. The work itself is not primary, it is secondary to all the other things we do.’
He says the experience of co-operative organisation has an important impact as ‘everyone gets that chance to do everything needed to run the co-op, giving people a good range of skills. In a wider sense this helps in a move towards self-responsibility and gives a more holistic understanding of organisations.’ He adds that ‘it is one of the most developed tools we have for getting things back into common ownership’.
This view is backed up by David Coulter of Co-operatives UK. He says, ‘There is no culture of formal links between workers’ co-ops or Co-operatives UK and wider social movements or community groups but it is fair to say that people who work for co-ops are often the same people who are involved in these. This gives strong informal links between the two.’ However, he believes that this division exists for a good reason. ‘Co-ops are businesses after all, they have different needs and aren’t solely there to look after any wider community. Workers’ co-ops are there to provide employment for and cater to the needs of their employees.’
Community benefits
There is no doubt, though, that co-ops can be beneficial to the communities in which they are embedded. Workers often live within the local community and this is likely to bring a convergence of interest between co-op and locality. Nowhere is this more applicable than at Ethical Consumer. The co-op has been based in the Homes for Change co-operative housing building in Hulme, Manchester, for more than 13 years. Founder members Rob Harrison and Jane Turner live in the building and there has always been a mutually beneficial relationship between the two co-ops and the local area.
Katy Brown, who is involved with the Next to Nowhere social centre in Liverpool, is grateful for the role the News from Nowhere bookshop co-op has played in helping establish the centre. ‘They are formally our landlords but they give us favourable rates and help publicise our events. In return we host book signings for them and have done work on the building. We also buy books from them for our library. They are part of our collective. We have a good relationship.’
More generally, local roots stop capital flight and keep jobs available in local areas. Some co-ops, such as the successful Unicorn grocery in Manchester, offer a social fund whereby they give a proportion of their profits to local campaigns and community groups.
Exploitation
This is not to say that workers’ co-ops always serve their communities well. According to research by Betsy Bowman, in some co-ops more than 40 per cent of work may be done by non-members. In such instances it could be argued there is a collective exploitation of wage labour. One workers’ co-op in Manchester hires temporary workers to do its ‘picking and packing’. These workers earn less than co-operative members, do not receive the same benefits as members and are forced to sign a contract that states that they will leave after ten months, which means they do not accrue the extra benefits due to all temporary workers under UK law.
Others argue that workers’ co-ops are examples of selfexploitation. Workers often work much harder and longer for less money than they might otherwise receive because they feel they have some ownership and are less alienated from their labour. It is also argued that workers’ co-ops do little more than create commodities for exchange in the open market, so their relationship with capital is little different from other businesses, and this leads to workers exploiting themselves ultimately for the benefit of capitalism.
As Tim Huet says in his ‘co-operative manifesto’, there is plenty about the current economic system that ‘inspires and even requires protest’. But we need a multiplicity of initiatives to build a solid counter-movement. Working models of economic democracy play a part in this mix alongside trade unions and single issue groups. We need a polyculture of dissent, not a monoculture of reactive and oppositional politics. The strength of workers’ co-ops comes comes from their ability to meet the needs of workers and encourage autonomous action on a daily basis – a revolution in the way we lead our everyday lives. As long as we reflect and engage critically with them, developing and adapting them as we do methods of protest, they can help to build a strong confident movement rooted in our local communities with the resources and abilities to challenge the hegemony of capital.
Original article sidebars follow…
Wholesale success
The largest workers’co-op in the UK is Suma. The wholefood wholesaler has a turnover estimated at around £24 million a year, making it the 51st-largest co-operative of any kind, as well as the largest independent wholefood wholesaler, in the UK.
Suma was started in 1975 in the back kitchen of a terrace house in Victoria Road, Leeds. Its purpose was to supply a number of co-operative health food shops in the north of England. It now supplies 2,500 outlets and won the Grocer magazine’s ‘Specialist Wholesaler of the Year’ award for 2009.
Yet Suma still operates without an internal hierarchy, a fact its members are not only very proud of but believe has been fundamental to their success. Like many involved in workers’ cooperatives, they feel that vertical structures can ‘hinder progress and stand in the way of fairness’, as they put it on their website.
The co-op structure is relatively straightforward. All cooperative members and employees receive the same net hourly rate of pay, no matter what their job or responsibilities. They have an elected management committee to implement decisions and business plans, but the decisions themselves are made at regular general meetings with the consent of every cooperative member. In practice, this means that their ‘day-to-day work is carried out by self-managing teams of employees who are all paid the same wage, and who all enjoy an equal voice and an equal stake in the success of the business.’
Another key feature of the co-op is multi-skilling. Members are competent in all aspects of the business and always hold more than one role within the co-operative. As well as being good for staff morale, Suma says this helps to ‘broaden our skills base and give every member an invaluable insight into the biggerpicture. It also helps us to play to each member’s various different strengths while enabling us to think “outside the box” when it comes to creativity and problem solving.’
Europe’s coop boom
More than 140 million people are members of co-ops of all kinds in Europe. Some 10 per cent of France’s employees work in the co-operative sector – consumer as well as workers’ co-ops – while the continent in general is having a worker co-op boom. There are now 83,000 such enterprises in 42 countries, employing 1.3 million people, well over double the number in 1982. There are some regions, however, that have a particularly strong history of co-operativism.
Emilia Romagna In Emilia Romagna in northern Italy, networking by thousands of small co-operatives has produced a regional economy that is the 10th richest in Europe. Emilia Romagna has the lowest unemployment rate in Italy and the highest GDP per capita. Just under half of the region’s inhabitants are members of at least one co-operative. With more than a century of co-operative history, the region now boasts more than 8,000 co-operatives. But it hasn’t always been this good and building this vast network has been a real struggle.
In 1926 the fascist movement, through the National Fascist Board of Co-operation, took over all the co-operatives and removed their autonomy. For two decades they fought hard to retain any independence, with members killed or imprisoned for resisting fascist control.
When fascism was defeated the movement began to rebuild, forming three national co-operative movements. The ‘Lega’ group represents the political left, ‘Confco-op’ represents the Catholic centre-right, and the ‘Associazione’ represents the centre-left, with a large number of unafiliated co-operatives operating outside these three groupings. The legislative and local government environment is favourable towards co-operatives, with tax benefits and other supportive legislation in place.
Perhaps the most interesting aspect in relation to the UK today is the use of co-ops in social care. In Italy there are now over 3,000 social care co-operatives, employing nearly 60,000 people, many of whom are handicapped or were formerly marginalised from mainstream society. In Emilia most of these are workers co-ops. They range in size from 10 or 12 members to over 500 in the case of CADIAI, which provides a range of health services and elderly care.
First organised in the early 1970s, social care co-ops were formed by care-givers and families to provide services to the disabled that were not available from the state. Today, their turnover is over 1.3 billion euros, amounting to 13 per cent of Italian expenditure for social services. In Bologna, over 85 per cent of the city’s social services are provided through social care co-ops.
In a recent study of elderly care in Emilia Romagna, it was shown that social co-ops provided a superior service at 50 per cent of the cost of state programmes. This can be traced to a number of factors, including more flexible working conditions, lower labour costs and greater commitment among workers resulting.
The Basque Country and Mondragón
The first workers’ co-op in the Basque region was set up in the early 1950s with a handful of members. The Mondragón network started in 1956 with a small stove factory built by five former students of a priest named José María Arizmendiarrieta. A focus on domestic appliances and machine tools for the protected Spanish market allowed the network to expand.
Today Mondragón has more than 66,000 employees operating over 160 co-ops, of which 135 are industrial, six financial and 14 involved in distribution. The three sectors are backed by the Caja (bank), and by housing, schools, health clinics, training co-ops and even a university founded in 1997. Mondragón is the Basque country’s largest business corporation and the seventh largest business group in Spain.
At the time that Mondragón was started, Franco was in power and trade unions were banned. But agricultural co-op laws allowed workers to own their workplaces and the co-ops provided protection for workers who were otherwise easily exploited. However, debates rage over how radical this sprawling business group really is today.
This debate intensified after 1991 when over 100 co-ops, previously organised by geographic regions and linked through the Caja, reorganised in three business sectors as Mondragón Cooperative Corporation. This allowed speedy, centralised decision making but opened them up to the criticism that they had lost their internal democracy and adopted too similar a form to the corporate sector. There are now large pay differentials between workers, although the ‘salary’ is based on a democratically agreed job rating index. Share capital also still only carries one vote per person and with no non-worker owners, co-ops remain in the hands of their active workforces.
In her book The Myth of Mondragón, Sharryn Kasmir discusses a number of problems, from working conditions under ‘just in time’ production methods to lack of union representation and a depoliticisation and loss of solidarity amongst workers. She argues that these issues are cemented by commentators from abroad eulogising the model without any critical engagement, limiting the possibility of the co-ops developing on more progressive lines.
