At party conference I asked Nick Clegg why the word ‘co-operative’ appeared only once in our economy paper and not at all in the resolution presenting that paper to conference. He advised me to write my views on a postcard and send them to him, and this is that postcard.
The third clause of the preamble to the constitution sets out the underlying principles of economic liberalism clearly and concisely:
We will foster a strong and sustainable economy which encourages the necessary wealth creating processes, develops and uses the skills of the people and works to the benefit of all, with a just distribution of the rewards of success. We want to see democracy, participation and the co-operative principle in industry and commerce within a competitive environment in which the state allows the market to operate freely where possible but intervenes where necessary. We will promote scientific research and innovation and will harness technological change to human advantage.
The approach taken by Liberal Democrats in Government to tackling economic problems has been co-operative, be that using credit unions to tackle loan sharks or co-operative energy switching to tackle energy prices or removing the restrictions on companies to direct their surplus food into food banks, luncheon clubs and other local charities.
In his response Nick cited the Royal Mail privatisation and the shares for rights schemes of examples of extending co-operative values, but these are small fry compared to what could be achieved if Liberal Democrats were to embrace the co-operative principles of economic liberalism. Recognising and encouraging the co-operative principle, not as an adjunct to our economic and social policies but as central to it, clearly and precisely answers the age old question of what the Liberal Democrats stand for.
Liberal Democrats must work to see the co-operative principles extended to allow workers to have a guaranteed option to buy out their company if it is under threat of takeover (hostile or friendly) or of liquidation. Indeed there is no reason why we couldn’t take the Argentinian approach of making worker co-operatives the first option in such circumstances.
The Tories despise co-operatives and Labour want to harness them with the dead hand of state. Only Liberal Democrats see the incredible potential that they bring to securing workplace democracy and ensuring that the people who do the work get a fair share in the profits they create.
Liberal Democrats should legislate for workers and shareholders to be able to vote for limited companies to become co-operatives, but to do that we must first make co-operatives a business model in their own right; in doing so the Liberal Democrats would make clear our ambition to build a strong economy and a fair society, enabling everyone to get on in life.
* Chair of Manchester Gorton Liberal Democrats, a member of the NW Regional Executive and the English Council and Vice President of LGBT+ Liberal Democrats
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15 Comments
“In his response Nick cited the Royal Mail privatisation and the shares for rights schemes of examples of extending co-operative values”.
These two policies are not what I would call co-operative.
I agree with you Iain. I am a great supporter of the co-operative principle and the existing Co-Operatives (even to such an extent as I am considering joining the Co-Operative Bank at a time when it is itself struggling). I am not a member of the Liberal Democrats and I did not realise the strong emphasis towards the co-operative principle which is in the Lib Dem constitution, yet if the Liberal Democrats were to run with this baton it would incline me far further to remain a Lib Dem voter.
Whether this stand would also cause others to be more inclined towards the Lib Dems I am unsure. Yet if the argument could be made to show how co-operatives are a great way to both further economic progress and distribute the rewards fairly, then it could radically alter the debate on the economy.
This area was one of the things that drew me to the party in the early seventies. Let’s hope it will become much more prominent.
There is a problem with co-operatives that anyone who wants to promote them needs to tackle – how do they raise money to get started? If they require money from the government to get started then it is not a co-operative, but just another form of public sector employment.
The other problem is what I call the “not for profit scandal”, which is people setting up businesses, calling them “not for profit”, but then paying themselves large salaries and bonuses. This problem won’t go away unless there are pay controls.
You also advocate stealing people’s property through tyranny of the majority with this line: “Liberal Democrats should legislate for workers and shareholders to be able to vote for limited companies to become co-operatives”.
Even if you think workers should be able to steal companies from their owners, remember that it is also things such as pension funds that would be affected.
I agree. I even made a speech at the inaugural SDP conference ( the London leg) in 1982! We’re looking at making it a call part of our campaign in Hackney in the council elections in 2014.
What concerns me is the ongoing coalition between the Labour and Cooperative Parties, whereby an MP can be a member of both parties, has to accept the Labour whip and rules, and enables Labour to bandy around the word ‘cooperative’ to attract those who believe in cooperative principles.. I am not sure how, but it has to be exposed for what it is and preferably stopped.
I think we missed a trick on Royal Mail privatisation by failing to use the 10% for long term cooperative style ownership rather than the 1990s style hand out to current workers. But then that’s the problem of different views within a coalition.
As someone who banks with the Co-op, I’ve long been appalled by the cynicism of the Co-op in aligning themselves politically only to the Labour Party. They are a movement, not a political party. The Labour Party didn’t even exist when the first cooperatives were set up, and Liberal thinking has long been supportive of cooperative ideas, not least JS Mill.
It would be nice if some senior Lib Dems in government started asking them some awkward questions about their political wing. Removing the exclusive links with the Labour Party would greatly empower the cooperative movement. For one, Lib Dems could more honestly promote the cooperative agenda.
Co-operatives are can provide a good solution in a limited number of cases but there is an awful lot of wishful thinking here.
“Liberal Democrats should legislate for workers and shareholders to be able to vote for limited companies to become co-operatives”. What do you mean by this ? What price should they pay for the business ? If you are suggesting a market price, there is no reason why they cannot do that now. If you are suggesting less than a market price why would any one ever invest in a British business if they cannot enjoy the reward for the risks that they have taken, and obtain protection for their intellectual property.
Iain, Thanks for raising this.
Although I know the preamble to the constitution is seen by many as holy writ it’s actually not very helpful. For example, “… encourages the necessary wealth creating processes…” is a classic motherhood statement that means something only in the context of some framework of economic thinking that points us towards what the <b<'necessary' wealth creating structures actually are. Politics abhors a vacuum so any void in our own thinking will inevitably be filled with someone else’s thinking which would leave us at risk of becoming merely an alternative Tory party. (Oh, wait…)
For me the obvious problem that must be addressed is that too many big company directors treat their firms as personal fiefdoms, to be plundered and asset stripped for private gain. Part of the solution is a (sort of) co-operative one. Legislate that quoted companies must have a supervisory board with worker representation, roughly on the German model which the victorious allies imposed on them after WW2. It’s worked out rather well for them.
When I think about co-operatives I think of consumer cooperatives but the movement is wider than that. I do recall Robert Owen and his efforts with worker co-operatives and the idea of worker ownership has always appealed to me and I know it was a Liberal Party policy and was a major reason why I joined the merged party. I think worker co-operatives can be seen as a form of socialism.
I think William Hobhouse when talking about “long term cooperative style ownership” is talking about that the 10% of Royal Mail being given to workers as a “trust” for workers and they wouldn’t benefit when they left. However this doesn’t appear very liberal and giving shares seems more liberal.
Maybe more could be done to force more worker ownership maybe company law could be changed so that say 10% of all dividends have to be paid out as new share capital for all workers according to their working hours.
I am not familiar with the Argentinian approach to takeovers and liquidations. As Eddie Sammon points out there is an issue about finance. He was talking about start-ups but it equally applies to how they would finance the buying out of the owners in a takeover or if there was a right for workers to vote for their company to become a co-operative (as Stephen Donnelly pointed out).
Firstly can I thank everyone who has commented for your thoughts on this subject. I won’t pretend to have all the answers but I do think it important we raise the questions and seek to find the answers. I am certain that others have considered them before us.
A Social Liberal points to the examples that Nick Clegg cited of shares for rights and the Royal Mail privatisation as being ‘not cooperatives’, and I totally agree that they are not good examples. Having said that the key point of the article was that the current models of limited companies or partnerships or sole traders do not allow for true cooperatives. For my own part I have cited the many good examples of coopertives that exist and have been used by the Liberal Democrats as vehicles for change.
Eddie Sammon rightly raises the question of how cooperatives get the startup money that they need. Pseudo-cooperatives have been managing quite nicely for nearly two centuries to achieve this. I would remind Eddie that vast companies such as HBOS, and TSB, mutual and oddfellows societies, credit unions, the Cooperative Funeral Service, Coop Travel and even CIS and the Cooperative Bank (for all its problems) managed to achieve this. There is no reason why Co-operatives can not offer Rights issues, or take out loans or have members who contribute to the wealth of the society in return for a dividend, and just to correct a later posting cooperatives are not necessarily not-for-profit companies, the profit is distributed as rights and dividends rather than as scrips and shares.
Eddie and Stephen Donnelly also comment on the proposal that Liberal Democrats should legislate for workers and shareholders to be able to vote for limited companies to become co-operatives as though this were theft. An example of theft would be to take a cooperative such as the Trustees Savings Bank and turn it into a limited company with the Government selling the shares despite the fact that the company was not the Government’s to sell. If members can agree to turn cooperatives into limitied companies (Halifax etc) then surely it is right that the opposite can be done. As for where the money comes from for the workers to buy their employer out, in Argentina it came from the Trades Unions. It would be far better use of Trades Union monies than funding political parties as it would enable their members to take ownership of the companies they work for. Oh and Stephen, I did not say ‘must’ I said ‘should be able to’, this presupposes that we have established the cooperative business model into UK statue in the first place.
Both Peter Tyzack and William Hobhouse cite the link between the Cooperative Party and the Labour Party, Actually it is only sections of the Cooperative movement that support the Cooperative Party and one big divide between the Cooperative Party and much of the Labour Party lies in the fundemental difference between workers owning the business that employs them and the state owning or controlling that buisness.
GF, the first sentence of the third clause is closely followed by the second which clearly places the context you are asking for on the first. There is no gap unless you fail to read the clause as a whole (which many who claim to be economic liberals seem to do).
Amalric states that he thinks that worker cooperatives can be seen as a form of socialism. Actually in that he is wrong, as worker cooperatives are clearly an alternative to socialism. Socialism is about others providing the controls on business for the benefits of the workers, cooperatives are about the workers having collective ownership of and a direct say in the management of the business they work for. There is an ideological chasm between the two.
Having read all the comments here, whilst they do raise many questions that need to be answered I firmly believe that the answers are worth finding as the cooperative approach that lies at the heart of the preamble to the constitution of the Liberal Democrats is one worth pressing both within the party and outwith.
Firstly thank you Iain for your comprehensive response to the comments made. However I think you have confused socialism with state socialism. Socialism includes state ownership and worker co-operatives and other forms of common ownership. Personally I believe you can define socialism as “To secure for the workers by hand or by brain the full fruits of their industry” and that is what a workers co-operative does.
I wish there were a moratorium on the use of the word “socialism.” It is merely a tag used by people for all manner of disparate plans and ideologies, many of which are directly opposed to each other. It no longer has a meaning of its own, and the various attempts to define it are not only at odds with each other but also with its historic usage.
“Socialism” really only had a clear meaning in the middle decades of the 19th century, when it was formulated as a response to a specific and pressing set of economic conditions in newly-industrialised societies, particularly Britain, France, Germany, and the Low Countries. Outside of that specific geographical and historical context, the term is without concrete value; and even in that context there were very different concepts of socialism within the socialist camp. The fact that various persons and parties have made and still make use of the term is a testimony to the power of the socialist idea in an unsettled and quickly changing world; but by the start of the 20th century it was, variously, a term of meaningless abuse, a hopelessly vague abstraction, or an excuse for various forms of dictatorship and oligarchy. It should not be forgotten that Lloyd George’s opponents were castigating him for “socialism” when he was still Chancellor of the Exchequer, referring to what now seem like a rather meagre set of reform proposals, radical only in contrast to the abject indifference which previous governments had shown towards Britain’s endemic social problems.
Whats the diffrence between co op bank and a building society? I am a conservative voter but more I read the more I like lib dem.