Getting perspective on the Co-operative Bank

Last week’s media furore over the Co-operative Bank’s ills was an onslaught of revelations and reactions.

Thankfully, though, there were some commentators offering a sensible perspective.

It’s worth bringing them together here because a common view emerges.

Probably first in the week was Philip Augar’s comment in the Financial Times

Second was the Guardian’s leader column published the same day

Then a few days later, on Friday, was the Co-operative News’ comment

And finally there was Ed Mayo’s blog this weekend

These commentators managed to stand back and look relatively dispassionately at the Co-operative Bank’s difficulties.

Yes, they say, there were big problems of governance, management and hubris at the Co-operative Bank.

But these were sad mistakes by The Co-operative Group, an otherwise successful business.

Most importantly, these commentators are all clear on one thing: the Bank’s problems tell us little about the state of the wider co-operative and mutual sector; nor do they put into question the legitimacy of the member-owned model of business.

The Co-operative Bank is just one unfortunate co-operative business.

Beyond the Bank, co-operatives and mutuals are diverse, global and thriving.


The moral limits of co-operatives

Are there spheres of life that co-operatives, as businesses, shouldn’t operate in?

Met with near-universal acclaim, Michael Sandel’s latest book, What Money can’t Buy: the Moral Limit of Markets, expresses a widely shared concern that the market is invading all areas of life.

Economics, previously restricted to employment and industry, has over the last thirty years been seen as a way for organising everything from school life to social life.

Incentives for kids to read, the purchase of bodily organs, paying people to be sterilised – these and countless others examples show how the market is creeping into everyday life.

“Without quite realizing it,” Sandel says, “without ever deciding to do so, we drifted from having a market economy to being a market society.”

Not only does this create unfairness, argues Sandel, where those with more money are able to live more happily and comfortably than others; it also corrupts important values like education and the human body by putting a price on them.

What does this have to do with co-operatives?

Co-operatives are businesses that have social responsibility, equality and concern for the community at their heart.

It is these values that have led co-operatives through history to take a lead on big moral issues of the day: working hours and gender equality in the early twentieth century, animal testing and fair trade in the late twentieth century.

Arguably, the marketisation of everyday life is one of the big issues of our day.

As such, it’s something co-operatives need to address as individual businesses and, ideally, as a movement.

If co-operatives offer an alternative to conventional profit-driven businesses, how do co-operatives distinguish themselves in the arena of the commercialisation of everyday life?

Is there some kind of principle that determines whether co-operatives should or should not do business in certain areas? How would we determine whether there are certain areas that co-operatives should or should not touch?

This issue is most alive in the area of public services. Co-operatives sometimes talk of going into public services to deliver a more innovative, responsive service that will better serve the users.

But they are also commercial organisations and, by working in areas previously to some extent immune from commercial pressures, they are actively introducing a market into them.

I know there are arguments to be had here. Points to be made on both sides. Nuances to be discussed.

But the point is, if co-operatives are businesses with a concern for the community there needs to be debate and a decision reached; co-operatives should not just drift into commercialising public goods simply because it’s a new market that could reap financial benefits for the business.

The issue of corrupting important values is also alive in relation to advertising.

Are there certain areas where co-operatives should not market and advertise their products? Schools and education? Social networking sites aimed at younger people? Advertising based on intrusive personal data?

Again, there is no definitive list, but there are important decisions to be made about what advertising is acceptable and what is not. Without the debate, co-operatives may drift into advertising that commercialises important public goods against their best intentions.

As Sandel puts it:

“Some of the good things in life are corrupted or degraded if turned into commodities. So to decide where the market belongs, and where it should be kept at a distance, we have to decide how to value the goods in question – health, education, family life, nature, art, civic duties, and so on on.”

It is businesses that are leading the way in commercialising everyday life.

It should be the most socially aware businesses, co-operatives, that are leading the debate about where the moral limits of the market lie.

Is the co-operative movement a social movement?

I’ve just returned from the International Co-operative Alliance’s Global Conference, spending a week with 1,000 supporters of co-operatives from around the world.

One of the most fascinating parts of the events was hearing large businesses explicitly aligning themselves with a movement for social change. It wasn’t unusual to hear people like the President of the largest healthcare insurer in France say, for example:  ‘We are kidding ourselves if we think we can be a social movement without a stable economic footing.’

Yet I left the conference feeling a little troubled. Not troubled by the people who were there, or what I heard and felt there. Everyone I met believed in a co-operation, in the possibility of a fairer world, and in co-operative business as a means to the bigger end of social change. It was incredible.

But troubled about the fact that there is a big difference between those attending this conference – and their passion for social change – and what you see day-to-day in the wider co-operative world.

And on reflection, I think that sense of trouble stems from the distinction that we in the co-operative world don’t draw clearly enough: between co-operative businesses and the co-operative movement.

Co-operative businesses are individual businesses, trading in the market and doing what they can to give their members, ownership, control and a share of the profits.

The co-operative movement is a collection of people who share similar ideals of what a better world would look like, and see co-operative businesses as a means to achieving this fairer, co-operative world. You might say they subscribe in form to the ideology of ‘co-operativism’.

Co-operative businesses have certain elements of that ideology written into their constitution – member control, democracy, sharing profits and so on. And some of them are incredible, inspiring examples of businesses committed to their members AND to something far, far bigger. But unless a co-operative business explicitly allies itself with others and this wider vision of a better world, it is simply an isolated businesses.

You can’t really call these isolated businesses part of a movement for a better world when they don’t advocate such a better world.

I don’t know how many co-operative do promote or subscribe to this vision of a co-operative society. But I’d guess there are a lot of co-operative businesses – perhaps even most – out there that don’t. And if this is true for the founders, directors and managers of these businesses, it’s likley to be even more true of the wider membership.

There are, I think, a few very important implications here.

First, it means the co-operative movement is probably not as big as we say. There may be 1 billion co-operative members worldwide, but how many subscribe to a vision of a co-operative society? If we’re honest, how many actually know there is such a movement, or that co-operatives provide an ideological alternative?

Second, and out of step with the now-dominant idea that co-operative businesses should be ‘mainstreamed’, we should see the co-operative movement as a political movement, Not party political, but a movement that aims to bring about a shift in the way the economy is organised. Individual co-operative businesses are important, but they are actually just the means to a much bigger and more important end.

Third, whilst advocating and campaigning externally is crucial, a campaign by the co-operative movement aimed at co-operative businesses and their members is just as urgent; perhaps more so. If we can persuade those co-operative businesses – and perhaps even their active members – that co-operation is not just a good way to run a business but is a good way to arrange society and the economy, then we will start to build a bigger and stronger co-operative movement.

Airports, orders and why co-operation requires democracy

I’m flying to the ICA’s General Assembly today, after a few delays. I’ll be running sessions, reporting, co-ordinating some social media and having a stand. It’s a rare event, so I’m planning to blog each day.

So here’s my thoughts from day one – the not-yet-complete journey:

All over Heathrow airport are signs saying ‘thank you for your co-operation’ and, after a mechanical fault on our plane which ended in everyone disembarking, we were asked to be calm and ‘co-operate’.

It’s interesting to compare the use of the word here with its use in co-operative businesses: it illustrates just why co-operation requires democracy.

The Oxford English Dictionary definition of the word ‘co-operation’ is ‘the action or process of working together to the same end’.

The airport’s assumption is that everyone wants the same end – for the wait to be orderly, for disembarking to be safe.

But the airport doesn’t know what people want: it hasn’t asked them; it’s just assuming that they want things to be safe and orderly.

So what the airport is really saying is that it would like everyone to comply, to do what it wants because it thinks it’s the best thing for everyone.

The airport may be right – it might be best to wait and leave in an orderly way. But not everyone has agreed, nobody has been asked, there has been no discussion or decision. It’s not really co-operation in the sense of people working together towards the same ends.

When we talk about a ‘co-operative’ business what we mean is a business that is run by the people – the members – who are working together towards the same end.

The implication behind this is that the members have talked to one another, deliberated and arrived at an agreed end. Without this, they wouldn’t be working together towards the same end, they’d be complying by following the dictate of a few or pursuing a variety of different ends. Without it, they wouldn’t be co-operating.

So, talking, deliberating and arriving at an agreed position – what effectively amounts to democracy – is necessary before you can start talking about some thing being co-operative.

Without this democratic deliberation and agreement, co-operation, working towards a common end, would not be possible.

The question for a co-operative business, then, is how far is it practicing democracy? Is it guided by its members who have talked to one another, deliberated and agreed a common end? Do all members input, or just a few? Is that an agreed process?And how many members need to debate and agree for that to count as a common end?

This isn’t a small issue. If co-operatives are to avoid being like the airport that asks people to co-operate but means comply, then democracy is essential.