Labour's New Economics Conference: Part Four, Co-Operatives Session

The fourth part of our write-up and analysis of Labour's New Economics Conference on alternative models of ownership.

This is the fourth part of our write-up and analysis of Labour’s New Economics Conference on alternative models of ownership. The “Alternative Models of Ownership” report is available here, and our analysis of the report here. This part focuses on the “Doubling the co-op sector: why and how” breakout session. You can find our recap of the introductory session here, the digital breakout session here and the housing session here.

Claire McCarthy, The Co-Operative Party

Co-operatives, and the relation between co-operatives and Labour, are both strongly historically rooted and have potential to address the current situation and the future. The Co-operative Party has been Labour’s sister party since 1927, and the first co-op was formed in Rochdale in 1844 to sell unadulterated food- a working class fightback in (E. P. Thompson) the “dietary class warfare” of early industrial capitalism.1 At the same time, co-operatives are “at the heart of Labour’s preparation for government”. The manifesto commits to doubling the co-op sector, which would, according to McCarthy, amount to the beginnings of an absolutely necessary “ownership revolution” in the private sector.

McCarthy then provided a useful, clear account of what is not meant by doubling the co-op sector. Firstly, success is to be evaluated less in terms of numbers, more in terms of creating the legal framework and structures to allow the sector to flourish. This, moreover, is more significant than mutualising from the centre “at the stroke of a pen”- although the mutualising of RBS would definitely be desirable. It is also necessary to distinguish co-ops as part of a real democratisation of the economy from sham versions, notably the use of mutualisation as both a vehicle and cover for privatisation, with some shares allocated to workers without any control over the firm, as in the case of Royal Mail. With this understanding the Co-operative party have commissioned work from the New Economics Foundation on legal frameworks and institutional arrangements to nurture the sector and achieve its doubling.

Two important new areas for co-ops were discussed. Firstly, in the “new economy”, particularly co-ops for the self-employed, with examples given of taxi drivers and supply teachers to bring back solidarity against isolation. This isolation is double and linked, both a subjective experience of atomisation and alienation from other workers, and the objective weakness against capital that these experiences express. Here, new co-ops would perform some of the functions of agencies in organising workers and linking them to work. This relates to a more general point, expanded on by other speakers, on the function of co-ops to integrate the economy horizontally, with the economy as relations between small co-ops, rather than hierarchically as in the large, internally manifold, capitalist firm. The second area, social care, was only mentioned briefly, though the example of Italian multi-stakeholder co-ops in social care is discussed in more detail in the “Alternative Models of Ownership” report.

Rob Jump, University of the West of England

Jump began by saying “we know why we want to double the [co-operative] sector; the question is how”. But do we, in fact, know why? Does this approach, taking for granted the wholesomeness of co-ops, dissolve certain foundational questions and in that dissolving miss potential means, which may be tied to the why? The why, for example, may require more attention to the needs creating co-operatives are responsive to? Having said that, whilst there was a risk of a slip into technocracy, Jump provided a technical account that was clearly useful.

The starting point was that it is clear that without some central intervention, it will not be possible to double the sector. A wide-ranging, radical package of measures is required and the emphasis has to be largely on small co-ops (the vast majority of both private businesses and co-ops are small). These measures need to address both creating new co-ops and co-operatising existing small and medium sized businesses.

Many of the important changes Jump discussed are already in the “Alternative Models of Ownership” report. Perhaps the two most significant were, firstly around access to finance, and secondly procurement. It is precisely those desirable features of co-ops—the control of workers and other stakeholders, and the centrality of non-market values— which make banks, who lack the control and shared values that they would have with privately owned firms, reluctant to lend. This is a significant barrier to co-ops being able to invest and expand and is often a spur for their absorption back into the private sector. With procurement, the work to be done by John Trickett in rebuilding civil service capacity and the intersection of growing co-operatives with re-empowering local government, is key.

Ed Mayo, Co-Ops UK

For Ed Mayo, the key task is one of value (and we could take this valuing both in an economic and ethical-political sense, and the unity of these notions is an absolutely central implied theme throughout the alternative models agenda) and putting people and nature first. Mayo emphasised that we were at the beginning of the conversation around co-ops, and how co-ops can contribute to what we might call a revolution in value. Statements arguing that we are at the beginning of a process were typical throughout the conference and are both potentially inspiring- things are open, it’s for us to create the future, and concerning- is it too late (as with Andrew Cumbers’s worry, the pooling of knowledge is 40 years too late), are we anywhere near where we need to be?

The central image in Mayo’s talk, and an image that expresses the central contradiction around co-ops, was that co-ops are “freshwater fish in a saltwater pool”- the dominance of capital in the organisation of the wider economy inhibits their flourishing. As with Rob Jump’s discussion, this demands a range of interventions to create a situation that is more supportive of co-ops.

Mayo then offered a set of examples. There was a special emphasis on agriculture, which was fitting given the origins of the co-operative movement in a food co-op and the ecological potential of co-operatives (and of the whole alternative models agenda). Mayo mentioned the recent role of the Scottish government in supporting farmers’ co-ops and the very significant numbers of Indian farmer co-ops contributing to a situation where co-ops support the livelihoods of one in ten people globally. From a global perspective, the doubling of the co-op sector is, as Mayo argued, a rather modest ambition if the size of the sector is compared with, for example, Switzerland, Argentina or Italy, particularly Emilia Romagna. For Mayo, the example of Emilia Romagna is particularly valuable for the high levels of equality throughout the economy coupled with relatively low redistributive taxation (similar patterns can be found in the Basque country, home of probably the most succesful co-operative, Mondragon). This suggests a significant role for an expanded co-op sector in what we could call “hard predistribution” (in contrast to the version pushed briefly under Ed Miliband’s leadership), as we argued in our study of the Alternative Models of Ownership report,

In essence, the report returns to the fundamental left recognition, going back to Marx, but reanimated in the new left, that we must alter (socialise) the underlying economic relationships – i.e. the ownership and control of productive capital – in order to produce the outcomes we are seeking – equality, investment, community economic stability, ecological sustainability – as a matter of course. Considerations of the difficulties of sustaining the social democratic state’s capacity to redistribute under globalised capitalism have certain parallels with the Milibandite notion of “predistribution” and overlap with the fact that the tax changes proposed in this Labour manifesto, while extremely radical in the current situation, are historically very moderate. However, the predistributive measures prescribed by Miliband were extremely mild, reliant almost entirely on labour market interventions such as education and training to attempt to alter distributional outcomes. This report – and the general direction offered by Corbyn and McDonnell – is far more robust, pointing to real changes to the nature of the ownership and control of productive wealth as well as being comfortable with a far greater level of redistribution.

Mayo concluded by outlining for steps for an inclusive, sustainable, democratic economy: commitment to local economic development, simplification of the corporate framework to make it more suitable for co-ops, acceleration of investment and tax recognition and support for worker buyouts. As the Alternative Models of Ownership report argues, this last step will be particularly important, given the impending “silver tsunami” of retirements of baby boomer business owners creating both an opening for worker buyouts and the possibility of seeing large numbers of small and medium sized businesses close.


There remain, however, a number of challenges and limits to both a co-operative agenda in general and to the particular version outlined here, and many of these can be read through Mayo’s fish image. Firstly, from a broadly technical perspective, are the proposals in the manifesto and alternative models report sufficient? John Marlow has argued for us that as they stand Labour’s National Investment Bank proposals are insufficient to sustaining the kinds of radical social transformation, including in supporting co-ops, that are required.

The next questions are tactical and strategic in nature, and perhaps mark a point where parts of the co-operative agenda may have outlived their usefulness. The cases of both social care co-ops and co-ops in the gig economy are useful examples here. Under a New Labour government which rejected renationalisation or wider economic reforms, or even under the coalition government with its ostensible commitment to “The Big Society”, demands to support and expand co-operatives were a tactically sound means of obtaining some relief and pushing a for islands of anti-capitalist values within capitalism. Equally, under current conditions, even if the May government makes far fewer gestures towards the sectors, the relief obtained through establishing co-ops in the gig economy is a valuable improvisation in difficult circumstances. However, if we are considering a preparations for a Labour government, which will have considerable capacity for exercising state power, the question remains whether co-ops are always the best solution. In a choice between the current situation with social care and co-operatives—perhaps following the Italian model—it is clear what is preferrable. Even here, though, there may be forms of or close to co-operatives that risk imposing additional burdens on care workers (the point was made during the session that workers in co-operatives tend to work harder, which may not always be desirable from a pro-workers perspective). At the very least, then, it is necessary to be precise about what kind of co-ops we are aiming for, with Carl Rowlands contrasting co-production with a “guild socialist” model able to develop skills, enhance workers’ positions and demand proper resourcing. Moreover, an incoming radical Labour government may also be able to fully integrate social care into forms of national ownership whilst creating forms of democratic control, which may be more compatible with Rowlands’s model. Equally, whilst the relief offered by co-ops in the currently under-regulated gig economy is valuable, an incoming Labour government may be able to address forms of exploitation in the gig economy more radically. There is nothing virtuous in relying on forms of resilience and bottom-up effort to make horrible situations marginally more bearable when the situations themselves could be transformed.

Then, there area set of problems of a less technical nature that emerge from how co-operatives are “still subject to the capitalist law of value”, as we put it in our analysis of the report, and appeals based on the wholesomeness of co-operatives cannot dissolve the problems and contradictions that result from this. The point could be expressed as how to go beyond “socialism in one company”, and as we argued in our analysis, the worker-owners of the very successful and internally deeply egalitarian US plywood co-operatives were often deeply conservative in their wider political behaviour. In Raymond Williams’s words, the question is how to go beyond co-operatives as “simply trading organisations” isolated from any struggle for alternative social purposes.2

The question can also be about the line between internal co-op relations and external ones, particularly when it comes to non-member workers employed (that is, in the last instance exploited) by the co-op’s worker-owners. The point was made that often the employment of non-members, particularly in a recession, is more secure than in private firms. This is certainly not to be sniffed at, but neither is it equivalent to a radical social transformation. In some cases, moreover, this can map onto and be intensified by the international division of labour, particularly through market pressures on larger co-ops. The case of Mondragon setting up a subsidiary manufacturing plant in Brazil, which Erik Olin Wright describes as being “run pretty much like a conventional capitalist firm” is instructive here:

The leadership of MCC believes that, given market pressures linked to globalization, this strategy of national and global expansion is necessary for the survival of the Mondragón cooperatives in the 21st century. Whether or not this diagnosis is correct is a matter of considerable controversy, but in any case the result of this expansion is to intensify the capitalist dimension of the Mondragón economic hybrid [and the non-inclusion of many workers in the co-operative produces] a global configuration of economic and class relations within the conglomerate structure of the Mondragón cooperatives [which] is in deep tension with its cooperativist principles.3

A further question where the impact of the global division of labour is significant may be found in the realm of tech co-ops. If tech companies exist near the top of global value chains, where more wealth is captured than really created, wouldn’t a tech co-op merely share the spoils of imperialism among a slightly wider group of people than private appropriation? This question relates to the point of tension that David Quentin identified between a radical and social democratic left within Corbynism over Britain’s neocolonial position within the capitalist world order.

In responses to questions, it was argued that co-ops could spread through serving as good examples, practical proof that a socialist ethos works. However, whilst this claim is not entirely without merit, it miscasts the role of the ethical. This overestimation of the power of ethical contagion in spreading an internally socialist organisation over wider society ignores the context where co-operatives are subject to market pressures and, in many cases, the worker-owners may benefit significantly from the wider national and international organisation of capitalism in such a way that they become integrated into capitalism as a whole. Far too much is being staked on technical, legal measures and ethical contagion. Indeed, one audience member raised the issue of the sustainability and limited socialist implications of the major expansion of South Korean co-operatives in a context where there was no real challenge to neoliberal values.

To return to Raymond Williams, the ethical needs to operate differently when it comes to co-ops. The ethical totality is not a network of islands of co-operation within capitalism but with the wider movement and its struggles against capitalism into which co-operatives are integrated, whether this is presented as the institutionalised culture of the working class, its “remarkable creative achievement”4 (Williams) or “the world of labour” (Ralph Miliband) or if we’re to take something more specific and hopefully beginning to be emergent today, “Corbynism from Below” (Tom Blackburn). To return to the example of Emilia Romagna, the density of co-operatives—whilst sustained, to some extent, by a useful legal structure—is far more an emanation from the wider world of Italian Communism, of its capacity to build deeply rooted institutions. To take one more example, the feminist and particularly socialist feminist struggles of the 1970s and 1980s produced a range of self-help institutions through which women, especially working class women, met their needs directly and came to make demands on government for resourcing.

Here Silvia Federici’s opposition between the movement rooted, popular power embodied in creating autonomous institutions to meet needs and on the basis of extended popular power making demands on the state for resourcing and top-down state services, alien to the lives of working class women provides a superior model for what co-operatives could look like to the simple trading organisations nurtured by an improved legal framework that many of the discussions at the session risked sliding into.

It is one thing to set up a day care center the way we want it, and then demand that the State pay for it. It is quite another thing to deliver our children to the State to control them not for five but for fifteen hours a day…In one case we regain some control over our lives, in the other we extend the State’s control over us.5

Within these socialist feminist struggles prefiguration (a theme already present in Raymond Williams) becomes central. In extending principles of co-operation, of meeting our needs and extending our capacities in common against the state and capital (this necessarily antagonistic relation between popular power and needs and capital tends to be wished away by appeals to the wholesomeness of co-ops), the task is less of developing legal frameworks for when we come to power, although there is a place for this, but one of building a movement within which popular capacities to satisfy needs that capital cannot and will not meet can be nurtured and developed.

  1. E. P. Thompson, The Making of the English Working Class (London: Pelican, 1968), p. 315 

  2. Raymond Williams, The Long Revolution, (Harmondsworth, Pelican: 1965), pp. 328-9. 

  3. Erik Olin Wright, Envisioning Real Utopias, (London, Verso, 2010), pp. 170-3. 

  4. Raymond Williams, Culture and Society, (Harmondsworth, Pelican 1958), pp. 312-4.  

  5. Silvia Federici, Revolution at Point Zero: Housework, Reproduction and Feminist Struggle, Oakland, PM Press, p. 21