Category Archives: Co-operation

The Real Worth of Co-operation

When all the dust has settled, it will be seen that the Co-operative Bank fiasco will have only added strength to co-operative governance and the co-operative ideal.

The origins of the co-operative movement go back to the industrial revolution and Robert Owen’s mill village at New Lanark. It was common practice then for mill owners to pay employees in funny money which was only exchangeable at the company shop where prices were fixed for the benefit of the owner. Owen’s employees at New Lanark were paid in real money and the company shop sold goods to employees at their cost price. That was the forerunner of the 1844 Rochdale Pioneers, the basic idea being to offer the common man an alternative to being fleeced by the mill owners.
Continue reading The Real Worth of Co-operation

God Complex ‘Drivers’ to Extinction

Keynes referred to them as the ‘madmen in authority’, referring to the policy makers and top financial and business executives, who rule our world. Maybe ‘madmen’ doesn’t quite capture their essential characteristics today. After all, mainstream economists would argue they are not mad, but wholly rational in their unwavering pursuit of self-interest without regard to any broader, more enlightened consideration. In a talk to TED’s global conference (TED – Technology Entertainment Design – bills itself as a nonprofit devoted to Ideas Worth Spreading), economist Tim Harford identified a ‘terrible affliction’, one that the ‘madmen’ might be suffering from. It was both ‘debilitating to individuals and corrosive to society’. He referred to as ‘the God complex’, the symptoms of which could be simply described as: ‘no matter how complicated a problem, you have an absolutely overwhelming belief that you are infallibly right in your solutions.’

The UK coalition government has more than its fair share of sufferers: Andrew Lansley at Health, Michael Gove at Education, and, of course, Prime Minister Cameron, self-confessed expert in how to manage hospital wards, deal with binge drinking, solve racism in football and make child adoption processes fairer and faster, to name but a few recent self-confessions. These are individuals convinced of their infallibility, despite the complexity of the issues they confront, and not prepared, unless forced, to consider the possibility they might be wrong and other solutions might be better.
Continue reading God Complex ‘Drivers’ to Extinction

What Really Matters Now

Professor Gary Hamel’s new book is available: ‘What Matters Now: how to win in a world of relentless change, ferocious competition, and unstoppable innovation’. Hamel is a breathless optimist. He sees the world changing and he encourages and motivates managers to achieve near impossible ends. He believes in the potential greatness and goodness of industry and teaches bright young people how to raise their game so as to take us forward to the promised land. He is today’s Peter Drucker, with slightly less gravitas, but rather more academic shape and a whole lot more bounce. We need Gary Hamel. Big business under the Hamel code would be honest and trustworthy, exciting and innovatory, giving people real opportunity to develop to their full potential and encouraging them to participate in decision making at all levels. He puts five issues at the centre of whether a business will ‘thrive or dive’ in the years ahead: values, innovation, adaptability, passion and ideology. They’re all people based factors which together ratchet up corporate performance to winning. But there’s a problem with Hamel’s brave new world. It’s not going to work.

Management practitioners today, at least the vast majority, believe in something quite different. They are taught to be, and have become, dedicated followers of the Friedman line: their bounden duty, they believe, is to maximise the wealth of shareholders, having no other social responsibility than that. To hell with everything else! Oblivious of the fact that maximising any one thing necessarily results in the neglect and impoverishment of everything else, they are taught that the relentless pursuit of shareholder value will end with the best result in the best of all possible worlds. But that, as Sir Mike Darrington of the Pro-Business Anti-Greed campaign would put it, is all ‘total bollocks’.
Continue reading What Really Matters Now

The Road to Co-operation: Escaping the Bottom Line

This book ( is about a new direction for market capitalism, based on co-operation rather than the neoclassical idea of maximising self- interest. It is not argued from a moral or ethical standpoint, but has a hard-nosed foundation in economic theory. The Road leads from the predatory capitalism we suffer today to a co-operative and far more productive capitalism we could enjoy tomorrow.

Predatory capitalism is the inevitable result of encouraging almost anyone to trade in almost anything, not just sub-prime, but actually worthless, even imaginary, financial “products”. The aim is to create a fever of anticipation which sucks money out of the real economy (manufacture, distribution etc) into bubbles of speculation in derivative or imaginary “products” or in mergers and acquisitions.
Continue reading The Road to Co-operation: Escaping the Bottom Line

Co-ownership Financing Growth

As announced this week, the John Lewis partnership is raising £50m to finance further expansion by issuing a savings bond to its ‘partners’ and customers. If it succeeds it would make a lot of expensive City activity seem rather unnecessary, and its success is not seriously in doubt.  The bond will return  4.5% gross plus 2% in John Lewis vouchers which puts it slightly ahead of the field in terms of returns.  City “experts” seem worried that this sort of thing might catch on. They advise investors to proceed with caution because the issue is not covered by the Financial Services Compensation Scheme.  So, if John Lewis were to go bust over the next five years, investors might lose their money.

Continue reading Co-ownership Financing Growth

The British Government’s Hopes for Partnership with the Unions

The end of the self-defeating miners’ strike in 1985 led to the somewhat fundamentalist right wing government imposing severe restrictions on the unions’ rights to engage in industrial action. Despite the 13 years of Labour rule, those restrictions were never undone. So it remains extremely difficult, within the law, for the union movement to mount any general industrial action. However, the wholesale nature of the current government’s expenditure cuts, presents a once in a life time opportunity for the unions to mount a hundred or more individual legitimate trade disputes, which could, to all intents and purposes, look very much like a general strike. The unions hope this will be the appearance of their London demonstration at the end of March, which they expect to attract a million supporters.

Continue reading The British Government’s Hopes for Partnership with the Unions

Big Theme or Muddling Through

In a recent article in The New York Review of Books, Michael Tomasky suggested the lack of any alternative big theme gave the free marketeers a head start in shaping and continuing to dominate the United States economy. The free market big theme may have been planted by Adam Smith, but it developed on the open prairies of North America where land was the free resource – confirmed by the Homestead Acts – which drove the early development of the US economy. So the big theme was not just markets freed from government interference and control, but personal freedom to claim a bit of America and the right to defend it with guns to fight off its previous occupants, the native Americans. That tradition gave primacy to ownership. When Friedman declared that corporate officials had no social responsibility other than to make as much money as possible for shareholders, it was hardly a shot out of the blue, but the confirmation of a long tradition.

Continue reading Big Theme or Muddling Through

Dogma has had its day

The forthcoming Oslo conference of the International Monetary Fund (IMF) and International Labour Organisation (ILO) is to discuss ways of dealing with unemployment arising from the 2007-8 credit crunch. As noted elsewhere on this site, the question is one of emphasis between, on the one hand, repaying the public indebtedness which was rashly incurred as a result of private greed, and on the other hand, the protection and regeneration of employment, particularly for the most vulnerable.

Continue reading Dogma has had its day

Chinese Corporate Governance

The Anglo-Saxon model of corporate governance, granting total supremacy to shareholder interests, still dominates most free market economies. Through charitable (ie tax allowable) think tank propaganda and lobbying, shareholder supremacy is continuing to make progress where it is not already total, such as in Germany and Japan. In those countries there is great pressure to conform to the Anglo-Saxon model. It is the Western orthodoxy, what Galbraith referred to as an institutional truth, that is a lie that has to be bought into in order for one’s career to prosper. With such universal acceptance, the time is surely not far off for its collapse.

Continue reading Chinese Corporate Governance

Simplistic Economics

Economists, by whom we are all ruled (to quote Keynes), are themselves ruled by abstract theory, rather than by observation of anything which actually exists in the real world. They tend to focus on dichotomies defined by ideal types, such as socialism and capitalism, both easy to describe in their pure forms but non-existent in the real world. Or, another dichotomy: the means by which resources are allocated: central planning or market forces. In reality, resources are allocated by both means: some by market forces and some by planned decisions. The real world takes advantage of both means, but economists argue that there is a simple choice to be made between alternatives as the one best way.

Corporate governance is another simplistic dichotomy on which economics depends. Would companies be best controlled by shareholders or workers? Free market capitalists, including all the UK and US governments of the past thirty years, argue for investor control. That has seen many industries destroyed for the short term interests of their shareholders. Cadbury and Chloride are recent examples of UK companies threatened by this approach to governance. There have been few examples of successful worker controlled companies and there may be little reason to expect them to be more successful than those in investor control.

But the middle ground, where neither shareholders nor workers have absolute control, and where both share responsibility, may be more fertile for corporate success. Germany’s two tier board structure consolidates that joint responsibility and has served German manufacturing industries well. A pragmatic balance between the interests of stakeholders seems more likely to produce the best outcome for the company and therefore all its stakeholders. But it is less easy to make the case than the simplistic dichotomies of economic theory.