The Conservatives' Commitment to Mutualism and Co-operatives

This space is not habitually given to expressing party political views, but occasionally it is unavoidable. Political parties inevitably, from time to time, address head on, topics which are of prime concern here. And sometimes their approach is either so right, or so wrong, that comment is necessary if these postings are not to appear totally disconnected from the real world. Today is such an occasion.

The British Conservative party announced its commitment to mutualism and co-operatives in the public sector, in what they described as ‘the most dramatic power shift for working people since the sale of council houses’. Co-operation and mutualism is an important topic which has been addressed elsewhere on this site. The Conservative approach may make a good sound-bite but is based on a wholly inadequate understanding of, and empathy for, mutualism and co-ops. Their proposal will either wither on the vine, or prove to be an expensive experimental failure, should it ever reach that stage.

Mutuals and co-ops operate within the for-profit sectors, but instead of paying surpluses over to external shareholders, they accumulate some within the business and distribute some to their members. That’s the whole point. That was how the great mutual financial institutions like Standard Life and Scottish Widows and the great building societies, such as the Halifax, got to be so big and so successful. Government deregulation allowed their rape and destruction, and many such businesses were ‘demutualised’, that is, their assets which had been accumulated over many generations, were taken at a single transaction and the companies converted into limited companies, which were induced to maximise the wealth of their shareholders at the expense of their members. The Co-op itself only narrowly avoided this fate. Thankfully, many co-operatives and mutuals still survive and have prospered rather better, both in Britain and America, than most public quoted companies through these past few years.

But if mutuals and co-ops operate in the public sector there would be no surplus to accumulate or distribute. So what would be the point? Well, it might be a simple matter of cutting costs. The Conservative argument is that they would be able to work without the central controlling bureaucracy which bears so heavily down on public sector organisations at present. So, would central regulation and control be removed? Well, not quite! The contracts such organisations would have with the public authorities, which would themselves require bureaucratic input, would be regulated as to quality of service, various performance levels, value for money etc. So it is not entirely clear where the bureaucracy would be saved.

So what does this ‘most dramatic power shift to working people’ actually amount to, other than confusion? Well, it provides a reply to Labour’s announcement earlier this month that mutualism and co-ops would be at the centre of Labour’s election manifesto.

But it’s not a very convincing reply. It would be rather better if politicians would think through their policies before they decided on the accompanying sound-bite.

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