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As you can see from my last blog post I am very interested in alternatives to capitalism. Co-operativism is one such alternative. Below is a short history of the English co-operative movement from Molly Scott-Cato in her book Market, Schmarket: Building the Post-Capitalist Economy (which I have put on my list of favourite books of all time). If people are interested in alternatives to capitalism, then I would recommend reading the extract below from chapter 3 below as well as the rest of her book.

In the extract she briefly mentions the development of the Spanish Mondragon Co-operative movement, where workers' co-operatives are much more prevalent than in the UK. For a longer history of their development have a look at chapter 10 of the book Adam Smith's Mistake: How a Moral Philosopher Invented Economics and Ended Morality by Kenneth Lux.

When you read both accounts please bear in mind there have been many problems with the Mondragon co-operatives recently. As Tim Huet found out in a visit to Mondragon in 2001, they have deviated from co-operative principles to remain competitive in the globalised market economy. They have become less democratic and introduced larger salary ratios between the lowest and highest paid workers as well as widespread hiring of non member workers. There is still hope in the co-operative sector but it faces even more challenges to remain competitive and true to its principles with the outsourcing, sweatshops and economic processing zones that comes with globalisation.

As I note in the conclusion to my paper on workers' co-operatives:

"With the spread of global capitalism and the ideology of neo-liberalism there seems to be less space for workers' co-operatives in the current global economy. As noted by Barry Smart, amongst others, significant changes have taken place in the structure and organisation of economic life since when the Rochdale Principles were first developed or even when the Mondragon co-operatives first began. The neo-liberal programme to deregulate economic life and to free market forces has produced an increase in temporary workers and insecure forms of employment or, in other words, the development of a "political economy of insecurity" (Smart 2003: 153). While the narrowly economistic, neo-liberal perspective that dominated the 1980s has softened a little, there has been a transformation of economic life that has involved "the implementation of flexible forms of capital accumulation, accomplished by means of the introduction of new organizational forms and the deployment of information technology in production processes." (Smart 2003: 153) Outsourcing, subcontracting and job insecurity (with the idea of a job for life largely disappearing except for the privileged few), as well as volatile capital flows, are widespread. Even the long-standing Mondragon co-operatives are feeling the forces of market pressures and are outsourcing some of their labour."

However, I do end my paper on a positive note:

"Nevertheless, because workers' co-operatives demonstrate unique opportunities for work reorganisation, democratic management structures, economic self-governance and even a redefinition of work and property, as Adams et al. put it, "Worker-ownership offers a vision of what ought to be."" (Adams et al. 1993: 2)

Anyway, see what Molly Scott Cato has to say on co-operatives and her ideas on how more of them could come into existence:

Just do it (together)

Having spent our adult lives in a competitive, individualist, selfish world, how can we hope to imagine an economy based on sharing? Fortunately, we have no need because the model has been not only developed in theory but operating in practice for more than 150 years: the cooperative model, also known as mutualism . Mutualism developed historically as a response to the first rampant emergence of capitalism, which brought with it the movement to the cities and the breakdown of traditional agrarian societies and their parish-based social support systems. Mutualism was the response of peoplke working together to solve the problems that capitalism had created. Writing in 1902, Kropotkin reports the following account from a friend who was involved with a workers' club in Whitechapel:

Nursing neighbours, in cases of illness, without any shade of remuneraation, is quite general among the workers. Also, when a woman has little children, and goes out for work, another mother always takes care of them. If, in the working classes, they would not help each other, they could not exist. I know families which continually help each other - with money, with food, with fuel, for bringing up little children, in cases of illlness, in cases of death. The 'mine' and 'thine' is much less sharply observed among the poor than among the rich. Shoes, dress, hats, and so on, - what may be wanted on the spot - are continually borrowed from each other, also all sorts of household things.

These informal support networks were extended into formal structures where very small contributions were collected to support social services such as libraries and welfare institutions, or put by in mutual savings societies against calamities such as illness (and hence unemployment and poverty in days before the dole) and death.

The formal cooperative movement was begun by a group who became known as the Rochdale Pioneers, as a result of the need for fresh, wholesome food in the industrial cities, and the inadequacy of the adulterated and over-priced supplies offered by commercial shopkeepers. This was not the fIrst cooperative activity in the economic sphere; there were other widespread examples before the middle of the nineteenth century, including cooperative cornmills built in Woolwich by dockworkers reacting against monopolistic mill-owners as early as 1760 and a cooperative shop owned by weavers in Fenwick, Ayrshire, in 1769. What was different about the Rochdale example was a formalized structure and system of rules which has since developed into the cooperative principles still operating today.

The Rochdale pioneers operated according to principles of open membership, democratic control, dividend on purchases, limited interest on capital, political and religious neutrality, cash trading and the promotion of education. These principles were established in 1844 and form the basis of the values still followed by the international cooperative moveement. It is important to note that Rochdale was not only about food but has influenced the development of the whole cooperative sector with its commitment to equity and democracy. From food the cooperative piooneers moved to consider work and why it was that the value generated from that work was so unfairly shared. Having taken control of the connsumption side of the equation, they devised a means to control the production side, by owning their own businesses and sharing the surpluses generated.

Many have attributed the surplus-value hypothesis to Marx, but in fact he was merely reporting the conclusions of disgruntled workers who noticed the profIts that were being made from their labour while remained in direst poverty. An example is an anonymous pamphlet sent to Lord John Russell (a reformist Whig member of parliament and later twice Prime Minister) in 1821. The author of the pamphlet makes the cenntral point that 'It is admitted that the interest paid to the capitalists, whether in the nature of rents, interests of money, or profits of trade, is paid out of the labour of others.' Her/his central thesis is that workers are paid the minimum that allows them to physically survive and continue to work, allowing the employer to accumulate capital. Marx elaborated on this account at great length, but I cannot see that he has actually improved on it.

The theory of cooperatives owes its origin to Robert Owen, who dedicated much of his life to developing an economy based on fairness and sharing. Owen wrote that the capitalist system 'has made man ignorantly individually selfish; placed him in opposition to his fellows; engendered fraud and deceit; blindly urged him forward to create but deprived him of the wisdom to enjoy'. As a self-made owner-manager in the Lancashire cotton mills, Owen was in a privileged position to make this sort of judgeement. He established labour exchanges and developed time-money, where employees could be paid an hour of their time rather than various quantities of money. He derived this idea from his early recognition of the importance of the labour theory of value and its extension to conclude that the value of a product should equate to the amount of labour time innvested in it, not the amount of money exchanged when it is bought or sold. Such a time-money system would also make each person's time equal, of course. Although Owen's practical experiments with cooperation met with mixed degrees of success, 'Owen's aim of opposing the competitive individualism and exploitation of capitalism remains central to co-operative thought'.

The central theme in cooperative thought is the importance of sharing the benefits of labour between all those involved in its production, and balancing their competing interests within the business. Green economics would add the planet into consideration of stakeholders, so that the conncept of productivity must be balanced by the need to respect the limits of our ecosystem.

In the UK the cooperative ideal built a huge movement which represented around a third of the retail market and covered people's needs in areas of their lives ranging from financial services to funeral services. Many of these companies still exist. In France the ideas took a different turn amongst artisans in the 1830s and received a boost in the revolutions of 1848, developing into syndicalism. 'Syndicalism differed from sociallism on two counts. Syndicalists did not seek alliances with socialist political parties, regarding the ballot box as an irrelevance. Further, French syndicalism was based upon direct worker ownership and control of the factory and the workplace.' Unlike the UK movement, the French version, which also spread to Spain until the civil war there, was devoted to violent, revolutionary activity.

Unfortunately these early developments were swamped by political movements to encourage reformism and state socialism. In the UK this position was typified by Beatrice Potter (later Webb), who along with Sidney Webb established the London School of Economics and many other bastions of socialist life in Britain, which have hampered the development of genuinely mutual and local solutions to economic problems. Potter supported consumer cooperatives but argued against worker cooperatives on the basis that 'Restricted to the dwarfish forms into which individual wage slaves can elaborate it by their private efforts, the coopperative system will never transform capitalistic societies.' The concern was that the workers' revolutionary potential could be deflected from political agitation into self-help. The rest is the history of the twentieth century, disfigured as it was by features such as Stalin's death camps and the destruction of socialism in the UK by Thatcherism and New Labour. How much easier it was for supporters of capitalism to win control of a single, unified political party than a thousand locally based and worker-owned businesses.

The cooperative movement had a rough time in the second half of the twentieth century, struggling with, on the one hand, the monopolization of mutual activity by the state that took place in the post-war years and, on the other, the carpet-bagging of its profitable, financial institutions spurred by the loadsamoney culture of the 1980s. Having formerly been the leading innovator, introducing the self-service shop in 1948, the Coop shop suffered as a result of the ending of retail price maintenance in 1964, which led to competition based on price rather than quality. The following decades were a difficult time for cooperative retail in the UK, and by the last decade of the twentieth century it was a shadow of its former self, retaining only some rather drab shops indistinguishable from the more attractive private competitors. But it is now undergoing an ideological and commercial renaissance affecting the main Cooperative Group itself, but also seen in the flourishing of smaller food coops, often based around wholefoods, Suma being the best-known example in the UK.

There is a corner of southern Europe, however, where a large proportion of economic activity is organized along cooperative lines. In the Basque country of northern Spain, the Mondragon cooperatives are providing a model for how other regional economies could be organized to maximize the benefits of mutual organization and to share the proceeds of economic activity fairly. The movement began when the local priest, Jose Maria Arizmendiarrieta, founded a technical school in the 1940s because of his conviction that knowledge was the key to economic success. In 1956 several of his students started the first producer cooperative, Fagor, which has grown to become a European leader in the production of domestic electrical goods. The Mondragon Group now consists of 67 industrial enterprises, 8 involved in distribution, and 15 which serve the group as a whole, primarily in the educational field. It also has Eroski, the leading chain of hypermarkets in northern Spain and with outlets throughout the country, and Caja Laboral, the workers' bank.

Wales also has its own unique workers' cooperative which is a source of great pride to its local community: Tower Colliery, in the Cynon Valley near Hirwaun. It is the only worker-owned deep mine in the world and a rare sign of hope to come out of the destructive political battle over coal-mining in the UK. Following closure of this modern and well endowed pit as a result of politically motivated government policy, the miners organized to buy it themselves, 239 of them investing their £8,000 redundancy money to fund the buyout. Since 1995 they have managed the pit themselves with enthusiastic support from the local community. They have now operated with surpluses in each of the past 10 years. Tower is the largest deep mine operating in the South Wales coalfield, employing 300 men, 90 per cent of whom are shareholders. In 2002 it was one of Wales' top 300 companies, with a £28 million turnover, a surplus of £2.7 million and a 26.8 per cent return on capital. It also provides its employyees with high-quality employment in which they feel pride and for which they do not need to sacrifice autonomy or self-respect.

Internationally, the cooperative movement is flourishing. The International Cooperative Alliance (ICA), the international coordinating body of the cooperative sector based in Geneva, has organizations for agriculture, fisheries, banking, consumers, health, housing, insurance, tourism and workers. It is a truly global movement, which provides a positive slant on globalization. The ICA is the largest non-governmental organization recognized by the United Nations. It represents nearly three-quarters of a million cooperatives worldwide, providing employment for over 100 milllion people - more than are employed by all the multinational corporations in the world. International Cooperative Day 2004 focused on 'fair globalization' and identified the important role that cooperatives can play in improving the lives of those who live in the world's poorer countries. Iain MacDonald, Director-general of ICA, made a strong statement in favour of fair trade:

We are by nature inclusive and international. It is galling, therefore, to see 'globalisation' and 'anti-globalisation' so misrepresented. Global trade, especially of a co-operative nature, has to be encouraged. What we are against is the way in which non-co-operative trade, with its emphasis on minimal service and maximum profit, is distorting world trade and causing untold damage and misery - the opposite of our values...There is a huge void which we should be filling - one which advocates fair and ethical trade through co-operation...The everyday activities of co-ops are helping to build fairer globalisation. Their Fairtrade initiatives, commmunity focus and development activities, plus their advocacy and lobbying efforts are all helping.

I outline in Chapter 4 my concerns about using trade, fair or not, as a reesponse to global inequality, but although the volume of international trade will certainly be reduced in a sustainable economy, what is traded should be traded for a fair price. Much of the fair trade produce sold in the UK comes from cooperatively organized farms: it is the cooperative structure that puts the 'fair' into 'fair trade'.

New growth opportunites

The rampant greed demonstrated by the late form of capitalism is offering significant advantages to those seeking to organize their business along coooperative lines. The emphasis on vast and rapidly growing profits means that parts of conglomerates that are viable and have a good level of sales none the less drag down corporate performance and can be made available for sale. This offers employees an opportunity to bring about a buyout.

Non-viability is often determined by accountants who are operating with an agenda, rather than providing honest figures, resulting in a process known as 'destructive accounting'. Tower Colliery was a beneficiary of this process, since the National Coal Board estimates of the value of its coal reserves were extremely pessimistic to justify closing the pit. Figures were massaged to indicate unduly grim forecasts, a process that miners referred to as 'fiddling' and that included the purchase of unused equipment and unnecessary and expensive refurbishments to innflate the cost side of the balance sheet. According to miners:

In the 12-months after 1984, they decided to install a new railway system to make the transportation of coal more easy - new rails, new roads, new weighbridge. They installed a new control with an estimated cost of £2 million. They decided to open up a new face with new advanced machinery - all to no avail. I don't think that they close a pit overnight as a result of a whim; it must have been on the cards. So why go to the expense of spending all this money? Building up people's hopes, then having them dashed like that. Most of the money was spent since the end of the strike. God knows how many millions it cost.

In other cases, dishonest accounting can impede buyout attempts. This happened in the case of the Vaux Brewery on Teesside, where a management buyout was attempted but because of an over-estimate of the value of the company, sufficient funds could not be found. In the end the disparrity between the amount the buyout team could offer and the value of the asset was far less than the City bankers' estimate.

The out-turn was over £15m less ... than BTAB [City-based Bankers Trust Alex Brown] estimated. Given that the gap between the value of the MBO bid and the closure/asset disposal was claimed to be £30.5m, this was based on an over-estimate of proceeds worth £15m. The real diffference between the MBO and closure/asset disposal may have been only £15m - just £5m more than that £10m difference the Swallow Board publicly claimed would have been acceptable.

As capitalists turn their attention away from extracting surplus labour value to speculation, it offers opportunities to those prepared to work to take advantage of the idle assets. The Movimento dos Trabalhadores Rurais sem Terra (MST: Movement of Landless Rural Workers) in Brazil has led the occupation of unused land which has been worked by cooperatives of farmers. Less than 3 per cent of the population owns two-thirds of Brazil's arable land; many of them are absentee landlords who leave the land abandoned. MST members have been seizing this land since 1985, and 250,000 families now work more than 15 million acres. This is danngerous work: more than 1,000 people have been killed in the past 10 years, but MST is supported by UNICEF and radical Catholic priests. It has now moved beyond agricultural cooperatives and created 60 food coooperatives. This has allowed perhaps a million of Brazil's poorest people to become subsistence farmers, avoiding the exploitation of the labour market.

The ability of cooperatives to survive in corners where corporations have less interest in engaging in their particular form of rapacious ecoonomic activity is also demonstrated in Argentina, where following the financial crash of 2001, factories were left empty in spite of workers wanting to work there and raw materials being available. The workers responded by expropriating their own workplaces and transforming them into democratically organized factories. There are now over 200 such 'liberated' workplaces in a diverse range of sectors including ceramics, textiles, footwear and printing. A film by Naomi Klein and Avi Lewis tells the story of these workers who took up residence in their own abanndoned factories and, by refusing to leave, turned them into cooperatives. For a real economy to function it is necessary to have raw materials, people wanting to buy the products, and workers prepared to work for wages that ensure the price of the product is within the price range of the purchaser. These three conditions were satisfied in Argentina, which was destroyed by the activities of financial speculators on the international currency markets rather than any intrinsic weakness in its real economy. As the focus of attention for capitalists shifts from production and sale to speculation, the field is wide open to those wishing to regain control of the real, bread-and-butter economy.

The related tendency of corporations to cast aside viable and profitable businesses because they are not making profits fast enough to satisfy shareholders offers opportunities for spreading mutual ownership models. An example is Datrys Consulting, which was a successful branch of a Dutch-owned firm of consulting engineers that learned of its demise as part of a company restructuring plan. With the support of Wales Cooperative Centre the employees bought the company, based in Caernarfon, north Wales, as a going concern from the Dutch parent and they began trading as a cooperative in October 2002. The workforce continue to provide bilingual civil engineering services, maintaining the five well-paid and highly skilled jobs in a depressed rural economy, and increasing them now to eight.

The need for the economy of the future to be ecologically respectful is a basic tenet of green economics, but it seems clear to me that for this to be possible the economy must also be organized along cooperative lines. In the case of wind power, the government appears to have reached the same conclusion. A recent Department of Trade and Industry seminar focused on sharing the experience of Denmark, where much of the wind-energy capacity is organized by the community which uses the energy or benefits from its sale. The Global Watch mission visited Denmark in October 2004 under the auspices of Cooperatives-UK. The support of the UK government suggests that it recognizes the need to offer local communities the value of wind power if the large-scale expansion it plans is to succeed. Communities are only prepared to accept the upheaval a wind farm will cause if they benefit directly from it. Wales is leading the way in community wind farm development in the UK, with the country's first community wind farm, Bro Dyfi, being opened in April 2003. The commpany has 59 shareholders, with holdings ranging from £100 to the maximum £1,000. The single turbine, known as Pwer Pobl or People Power, has a maximum output of 75 kW, enough for nearly 50 households. The Renewable Energy Investment Club is following this up by offering another share issue in a similar venture.

What is the nature of the link between sustainability and cooperative organization of the economy? I would suggest that the key is responsibility. I recently interviewed some members of environmenntally focused worker cooperatives to explore their views on this issue. Jan Cliff, the prime mover behind the renewable energy consultants Sundance Renewables in Ammanford, south-west Wales, made the point: 'The trouble with the corporate model, as I see it, is that it is based on a very hierarchical structure and that does disempower people working within it even with the better run or managed corporations, that have managers with a degree of corporate social responsibility.' The nature of the employment relationship in the era of downsizing and outsourcing is a tenuous and distrustful one. You take your pay but think little about the strategy of the firm or the moral consequences of its activities. This is the direct opposite of a mutual economy, where your prime motivation is solving a problem and being embedded in the commmunity you are providing a good or service for. As Jan put it, 'Workers [in a conventional business] can think it is the bosses' problem; it's not my problem.' Mutualism, by contrast, is about taking responsibility for solving one's own problems, and in the environmental niche this apppears in the form of taking responsibility for the need to live in harmony with the planet.

Conclusion: if you don't like the heat...

We need to develop and design a system for the production and distribution of goods that balances the needs of producers, consumers and the planet. Since we all rely on the planet for our survival, and play the other two roles at some points in our lives, this is only sensible. Otherwise we would be robbing Peter to pay Paul, or rather robbing ourselves to pay ourselves in our other incarnations. The robbing that we want to see an end to is the robbing of value by those who do nothing but use their money to make more money. That was the original purpose of the cooperrative movement and it remains valid today.

The cooperative model has long been marginalized within convenntional economic theory. More recently it has attracted increasing amounts of positive comment from theorists of regeneration:

[The social economy] is becoming seen as a holistic solution for social exclusion in a number of ways. First, by encouraging collective self-help, confidence and capacity building, and nurturing the collective values of the economy via socially useful production. Second, by humanising the economy via an emphasis upon autonomy, associational values, and organising the economy at a 'human' scale. Third, by ennhancing democracy and participation via a decentralisation of policy to local communities and place. Fourth, by bringing about a greater degree of systemic coherence to the local economy via the local production and consumption of goods and services (a fortiori if this is linked to the creation of a local currency). Fifth, by acknowledging the relationships between economy, environment, politics and society.

Other commentators are aware of the radical potential of cooperation as an alternative form of economic organization to capitalism. That explains why, at the same time that it is being explored and streamlined into more business-friendly fonns, it is also being ideologically marginalized:

This article is about the tensions between efforts at gradualist reform within existing circumstances, and the possibility of fundamental social change and liberation through the creation of radical alternatives to the mainstream. For this is the duality which has always existed in the social economy: on the one hand, its pragmatic, incremental, cooperative atttempts to ameliorate conditions, in the face of need and adversity, versus, on the other, its utopian vision of a bright and self-sufficient commonnwealth, based on principles of mutual cooperation, in which social needs and usefulness would be key to the production of goods and services, and everyone would be able to realize their fullest potentials.

If this alternative were not viable, why would the capitalists work so hard to marginalize it? A more worrying sign is the recent degree of political attention attracted by the sector, including the setting up of the Cooperative Commission by Blair and his New Labour hordes. Mutualism is a valuable tool bequeathed to us by those who worked to protect themmselves against capitalism in its early years. It is worth protecting and developing rather than reinventing the wheel. Why should we engage in exploitative employment relationships when a fairer model is available? Rather we should share the mutual model, which is not only fairer but, by sharing rewards equally, increases incentives to improve both efficiency and productivity:

The key to unlocking interest in the co-operative form of enterprise lies in demonstrating that co-operatives can serve the mutual interests of all stakeholders. Employee-owned businesses are more productive when the entrepreneurs and employees have a financial stake in the growth of the enterprise. Customers are more loyal to businesses they have a finanncial interest in.

So cooperation makes sense within a conventional economic mindset, but more importantly it enables us to feel good about what we do as both prooducers and consumers, knowing that we are operating fairly and with justice. And, if the link between sustainability and cooperation is an esssential one, as I believe, then it also guarantees our ability to treat the planet with respect while engaging in economic activity.