Saturday, 20 February 2010

Co-ops need a level playing field, not handouts

As previously reported and welcomed on this blog, the government is giving profile co-operative ideals a way never before considered, as argued in this piece in the Guardian.

It’s a big idea, whose time has clearly come, and I endorse it wholeheartedly. However, I was concerned by the tone of the article, which talked about “pumping resources” and “financial support” for Co-operatives.

Whoa, there. That, for me, is not what Co-ops are all about and I’m sure it’s not what they themselves are suggesting. The proud tradition of Co-ops is to reinvest profits: and to prioritise other important outcomes like employment, quality and fairness. But it’s not to take handouts from government. Co-ops need to be competitive, for the obvious reason that they compete directly in the marketplace with companies which are not co-ops. If they don’t, they and the movement die – it’s a basic principle of the co-operative world.

But it’s not about state subsidies, like Tony Benn did briefly with Triumph Meridian in the 70s – that just creates wrong incentives and ultimately harms the fine name of co-operatives. What we need is proper legislation which creates a level playing field for Co-ops, a process started by the snappily-titled Co-operative & Community Benefit Societies & Credit Unions Bill currently going through Parliament.

And that won’t cost the government a penny in ongoing support, will protect Co-ops’ good name with their supporter base (which is far wider than just the Labour Party), and maintain their proud tradition of standing on their own two feet.

Now that's co-operation.

4 comments:

  1. Hang on a minute, the state gives massive handouts to profit-maximising firms.

    Co-ops have a harder time competing because they tend to internalise environmental and social costs which capitalist firms don't.

    Tony Benn's attempt to support the abortive worker co-ops of the 70s was an admirable experiment - better than leaving firms to go bust like Rover in 2005, or plants to close like Vestas in 2009 and TCP in 2010!

    I note you've not commented on the Tory plans re: co-ops in the public sector, which would also require state subsidy.

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  2. You make a fair point, if this is what you mean, that the state has recently pumped money into banks, something which makes most of our stomachs churn, particularly given their propensity to now claim staff bonuses. But unavoidable, if we wanted to protect the savings of ordinary people.

    However, aside from the recent one-offs for banks I don't see many places, if any, where we give significant state subsidies to other companies. There is occasional targeted tinkering to encourage, say, startups or green business which I think is quite correct and proper, but major subsidies we stopped doing in the 70s.

    Now where I take issue is your assertion that we should be "nice to" Co-ops because they have greater costs. Well, they may but they also have less requirement to pay dividends to demanding shareholders, which offsets that requirement. More importantly, we shouldn't subsidise them because they don't want us to. We don't subsidise John Luis or CWS, and they would never ask us to because it undermines their arguments to be taken seriously in the business world, not to mention their incentive to be efficient and competitive (not at all incompatible with being socially-aligned, by the way).

    Tony Benn - well there we part company I'm afraid! On the Tory Co-ops: the whole thing is well-known as a joke, a failed initiative. The Conservative Co-operative Movement has no members and has never held an AGM. And as far as I know, there is no plan to subsidise state sector Co-ops at all, just to subcontract out a state service, which is not the same. Tories do state subsidy - no way!

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  3. Privatisation of utilities and transport, and the liberalisation of mail services are one way in which the state has boosted capitalist firms. That's what I was thinking of when I said "hand-out" - and it is, but not directly, a boost to capitalist enterprise. Along with deregulation of financial services...

    I don't argue there should be hand-outs for existing firms like John Lewis or The Co-operative Group. I think that there are things that could be done to boost the co-operative sector indirectly, such as re-establishing the Co-operative Development Agency.

    Interestingly, "Red Tory" Phillip Blond is now arguing that all enterprises should become social enterprises - which I take to mean that social and environmental costs should be internalised and minimised by firms.

    As a report in the Guardian showed the other day, the world's most profitable firms would have to massively reduce their dividends if they had to pay the true cost to the environment and society of their operations. This puts the capitalist firm at an unfair competitative advantage to firms which have CSR hard-wired into their ownership structure and business culture...

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  4. A truly happy person is one who can enjoy the scenery on a detour. ....................................................

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