“Co-operatives should, I believe, play an essential part in the economy of the future”
Edited extracts, added information and links (full text here).
John McDonnell pointed out that wealth is more concentrated now than it has been for a century or more, social mobility has dwindled, financial legislation is being unwound and serious attempts at scrutiny scrapped, just a few years after the catastrophic crash that was the bankers’ responsibility.
A succession of governments promised that by unleashing markets, governments would unleash opportunity and creativity. This approach promised new freedom for individuals, free from the dead hand of the state – a “shareholding democracy” would arrive through privatisation. But the promises turned out to be illusory.: today, share ownership by individuals is at the close to the lowest level ever recorded. Just 12% of shares are owned by individuals in the UK, down from 28% in 1982, and pension funds own only 3%.
The co-operative tradition
We must look elsewhere. There is a long labour movement tradition of decentralisation and grass-roots organisation, stretching from RH Tawney, GDH Cole and the guild socialists, back to the Rochdale Pioneers, the Society of Weavers in Fenwick, Ayrshire, and even further back to the radicals of the English Civil War.
The expansion of co-operatives in Britain since the crisis, matching developments across the rest of the world, shows the potential. There are now more than 7,000 independent co-operatives throughout the UK, contributing £35bn to the economy. Co-operative businesses are more stable. Whilst only one in three new businesses makes it through the difficult first five years, four out of five co-ops do.
Preston, inspired by cooperatively run communities in Cleveland, Ohio and the world’s largest co-operative group, Mondragón, in the Basque region of Spain, has developed an extensive programme, working with the Centre for Local Economic Strategies thinktank and an EU network of cities that face similar challenges. Major local employers and buyers – so-called anchor institutions, like the University of Central Lancashire, are driving through a local programme of economic transformation. By changing their procurement policies, these anchor institutions were able to drive up spending locally. They’re looking to shift a proportion of the joint council’s £5.5bn pension fund to focus on local businesses, keeping the money circulating in Preston. And the council is actively seeking opportunities to create local co-operatives as a part of local business succession, working with the local Chamber of Commerce. The aim of the Preston Co-operative Network (includes video) is to sustain high quality local employment, by giving the chance for workers to keep a business in local hands. Read more here. There has been interest in this programme from other councils, including Birmingham, Rochdale and Sheffield.
The great majority of people pay their taxes because they know taxes sustain the services we all need. It’s part of what makes a good, functioning, fair society. Yet we have large corporations and the super-rich apparently viewing tax payments as an optional extra. That can’t go on. Ultimately, it undermines the public services we all need – and forces the burden of taxation onto people less able to carry it. State spending is not the answer to everything: there are clear limits on what can be achieved here. But we can make the system work far better, and distribute the burden more fairly.
A fairer economy requires a fairer tax system. The tax system will be re-examined and simplified so it is fairer to everyone and encourages the growth a fair and prosperous economy, taxing assets in an economically efficient way.
Co-operatives, like other small businesses face real difficulties in getting the funding they need from high-street banks
We’d work to bring about the conditions for a flourishing of co-operative entrepreneurship. No other major developed economy has just five banks providing 80% of loans. We’d look to break up these monopolies, introducing real competition and choice. Regional and local banks, prudently run and with a public service mandate, have to be part of the solution here. With consortium co-operatives providing an effective means for new businesses to share and reduce costs, we’d look to support these at a local level, working with local authorities, businesses and trade unions. Italy’s Marcora Law, supporting employee buyouts and providing matched funding for those seeking to establish co-ops, is a model worth considering.
The Tories have offered a “Right to Buy”. Labour would seek to better this. We’d be creating a new “Right to Own”.
“We will look into the recommendation in Graeme Nuttall’s report on employee ownership, creating a statutory right to request employee ownership and have proposals considered by their employers. We should look to extend this approach, offering employees first rights on buying out a company or plant that is being dissolved, sold, or floated on the stock exchange.
“And as our policy development process rolls out over the next few years we will ask ourselves time and time again how the practical, everyday-socialist principles of the co-operative movement can be applied. In an uncertain world where a laissez faire market approach continues to fail, co-operation is an idea whose time has come again. This is the start of developing a new, positive economic alternative for Labour – the new economics”.