An alternative growth index?

According to today’s quarterly announcement on economic growth the UK economy has grown by 0.8%.

Cue the usual debate: Are we pulling out of the financial crisis now? Is the government getting it right, or still holding us back? Are people spending again? Is it because of exports, holiday season, better weather? Can business owners feel more confident?

The usual debate, though, obscures the important questions we should be asking.

A focus on growing national GDP might have some positive effects (although there’s an argument to be had there) but there’s much more that we’d like to see growing in our economy beyond GDP. Are people getting a share of the wealth generated? Do people have any control over the businesses? Do people have decent jobs? Is the economy working for the majority, or just a small group?

So perhaps, alongside the quarterly growth measure, we should have some other kind of alternative growth index: one that tracks how widely the benefits of growth are spread in the UK.

Indicators for this kind of growth could be fairly straightforward, for example:

  • Number of direct shareholders of PLCs
  • Number of co-operative and mutual members
  • Number of micro-enterprises
  • Average wages at different bands and levels
  • The size of average pay ratios
  • Feelings of engagement at work

This is just a starter.

The point is, if you were to combine these, you would get a sense of whether or not the share of ownership and wealth in the UK is growing. And that would be a far more meaningful form of growth to measure in the economy.

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Stories of work, control and dignity

Whilst the Co-operative Bank saga has rolled on over the past week, I’ve also come across some stories of what co-operation and mutualism are all about: preserving jobs, giving people some control over their lives and restoring their dignity.

There’s a fantastic article by John Restakis on the takeover of a factory in Greece by its workers who, mirroring what happened in Argentina a decade ago, are opening the doors of their closed factory and beginning manufacturing again.

In Argentina itself, a recent look at what happened to the occupied factories a decade on reveals that around 180 factories employing 10,000 people have survived, as well as inspiring a co-operative renaissance in the country.

There’s a new book by Dan Hancox on the village of Marinelada in Spain, another European country being crippled by the financial crisis, where they have created a collectively-run community, accompanied by jobs, hope and solidarity.

And there’s a whole host of stories in Anarchists in the Boardroom, a new crowdsourced book by a Liam Barrington-Bush, that looks at the organisations adopting non-hierarchical ways of running themselves in order to be more human.

Thanks to Rebecca Harvey, Kate Whittle and Julian Dobson for the links.

Taking power from the people

Yesterday will surely go down in history as a day of distasteful investor news, a day when power was taken from the people.

The big news for those of us in the co-operative and mutual sector was that the Co-operative Bank’s rescue bid will result in the customer members of The Co-operative owning just 30% of the Bank, the rest being taken primarily by institutional investors.

The big news for the UK as a whole was that the development of nuclear power plant will be financed and owned by a consortium of largely overseas companies and investors. Regardless of views on nuclear, this erodes the (admittedly very abstract) principle that the people should have control over their energy power.

Why the Co-operative Bank’s problems matter

So, the Co-operative Bank’s rescue bid – which involved a partial flotation on the stock exchange to raise capital whilst The Co-operative Group retained around 70% ownership – has failed.

Following very difficult negotiations, it now looks like the majority of shares in the Bank will be held by institutions, with The Co-operative Group retaining just 30% ownership.

There is – and will continue to be – an inquest into the causes of the problems that led to this. Hubris, failed expansion plans, disengaged members, executive failings and much else will surely turn out to be factors.

But what perhaps hasn’t been said, in simple terms. why it matters. For what it’s worth here, I think, is why it matters.

To society. The Co-operative Bank has been arguably the biggest force for good in the UK banking sector for the last 20 years – a prominent ethical bank that led the way on ethical investment and sustainability. Without it there will be less of an ethical counterpoint to standard banking practices.

To customers. The Co-operative Bank provided an alternative for customers, offering them an accessible mainstream bank where they could feel good about what their money was being used for. There are other ethical banks, but all are small and niche; there may be no easily accessible alternative anymore.

To co-operatives. The Co-operative Bank was perhaps the defining brand of the co-operative sector in the UK – when people think about the word co-operative they think about an ethical leader. In the short to medium term, this association will be damaged by the Bank’s problems.

To the economy. The tragic unfolding of events stem from a deeper problem – that the institutions governing banks and business favour one model of banking, despite the fact that the model has been shown to fail since 2008. Specifically, in this case, Standard and Poor’s downgrading of the Bank was partly a consequence of the rating agency ignoring the capital available to The Co-operative Bank because it was owned by a much larger Co-operative Group. A major catalyst for these problems was the blinkered view of acceptable banking practice.

Sharing and co-operation: a tale of two economies

After reading Evgeny Morozov’s article on the sharing economy which appeared recently in the FT, I’ve been thinking about the similarities and differences between the sharing economy and the co-operative economy. This is just a start, really, but a few reflections.

The new and increasingly popular idea of the sharing economy, though eclectic, is epitomised by individuals cutting out hotels by hiring their apartments to one another online, by individuals trading with one another rather than through conventional businesses and by new apps to enable peer to peer sharing.

The much older co-operative economy, similarly diverse, is epitomised by farmers clubbing together to share costs on machinery, large retail businesses owned by tens of thousands of customers for the last 100 years or worker owned wholefood businesses.

A number of immediate contrasts and similarities come to mind when you put these, admittedly stereotyped but nonetheless not unfair, descriptions together.

– both are about redistributing wealth and power beyond conventional structures

– both offer the hope of more sustainable enterprise

– one feels very modern, the other more traditional

– one is about individuals, the other about collectives

– one is about entrepreneurialism, the others about sustainable business

Ultimately, the two feel really very different.

The sharing economy seems to be about cutting out corporates, individuals doing things on their own, about enterprise, disrupting bureaucratic structures.

People hiring their apartments, sharing their cars, trading between themselves, lending not owning . . .

In the end, it seems that the sharing economy involves stripping back the structures that have protected and constrained individuals so that they can unleash their entrepreneurial
drive.

Co-operatives, on the other hand, seem to be about the structures that protect and support individuals.

They require an element of bureaucracy to give people a voice, to protect them, to treat them fairly.

The downside of this may be occasionally holding individuals back for the sake of the common good. But the upside is that individuals are safer, not left on their own to thrive or die.

So the difference, you might say, is between a more striving and individualistic sharing economy and a safer solidarity co-operative
economy.