Economic democracy quote #1

A Preface to Democratic Theory

Here’s a great paragraph on why economic democracy – giving people control and ownership of businesses – is a key way of creating greater equality.

Most interestingly, this is from Robert Dahl, a prominent democratic theorist whose big idea was the need for polyarchy rather than democracy, by which he means elites competing with one another for votes based on different interest groups and positions – a situation not that dissimilar from what we have now. Hardly the radical then.

As Dahl puts it:

” . . . differences in ownership and control of enterprises, while certainly not the origin of all forms in inequality, are deeply implicated in inequalities of many kinds: in esteem, respect, and status, in control over one’s daily life, in income and wealth and all the opportunities associated with them, in life chances for children and adults alike. It seems to me scarcely open to doubt that a society with significantly greater equality in owning and controlling economic enterprises would produce profoundly greater equality than exists in America today.”

Robert Dahl, A Preface to Economic Democracy, 1985, pp5-6

We need a different narrative

The last year has revealed that the co-operative movement needs a different narrative.

Since the start of the financial crash in 2008 we have seen the gradual rise of a certain narrative about co-operatives. We might call this the ‘performance narrative’, which says, in short, that co-ops are successful businesses that can outperform their non-co-operative rivals.

Whilst this wasn’t necessarily a co-ordinated strategy across the movement, it has become the dominant narrative, with many of the loudest voices in the movement using it in their communications and, in fact, reflecting it in their commercial strategy.

The Co-operative Group’s attempt to grow through acquisition and merger is the most visible example but the problems at Rabobank and Mondragon, the regular claims in the UK, Europe and internationally about coops being more resilient than other business models and the large number of pieces of research commissioned to explain the productivity gains and competitive advantage of co-ops and employee ownership – all these point to the dominance of the performance narrative that tells us that ‘through good times and bad’ co-ops are a more resilient form of business than other models.

There was always, though (and, of course, still is) a different narrative being pursued by other coops that haven’t got such a loud voice.

This narrative, which we might call a ‘people narrative’ as opposed to a ‘performance narrative’ doesn’t
emphasise the conventional business and economic benefits of coops. It focuses on something fundamental and unique to co-ops – on the fact that they offer of an alternative to conventional businesses by putting businesses under the control of people, rather than vice versa. In this narrative, whether co-ops are better than other businesses in conventional terms is by the by. Their significance lies in giving people control.

It’s the subtle narrative we’ve seen from worker coops in particular, like Suma in the UK or New Era Windows in the States, where the stress is on creating decent work and giving people voice. It’s also something we see in the growing community shares movement. And it’s evident globally around the role of coops in international development.

If the coop movement – not just a small number of coops – is to genuinely offer an alternative in line with this people narrative some significant changes in the way many coops operate May be needed – we may need to think about the size and structure of coop businesses, as well as their democracy, governance and member control.

But what it needs first and most of all is for the coop movement to move away from the narrative of resilience, productivity and success. That’s not to say that co-ops aren’t all these things. But they are not what set co-ops apart.

What makes co-ops unique is that their structure gives people control.

So let’s focus on this. We need to establish a different narrative around co-ops being a genuine alternative which puts people in control of business and the economy.

A European manifesto

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Cooperatives Europe’s lovely new manifesto (which I was lucky enough to help write) has some simple asks of MEP candidates.

What’s interesting is that they are similar to the asks of government that co-ops are making around the world. What co-ops need is a legislative framework that puts them on a equal footing with other forms of business, and increased awareness amongst entrepreneurs and those supporting business development and growth.

The manifesto is here: https://coopseurope.coop/sites/default/files/2014%20COOPERATIVES%20EUROPE%20MANIFESTO_lowres.pdf

Management theory and employee ownership

So, today, 4 July, is Employee Ownership Day. It’s the UK’s first annual celebration of employee owned businesses, led by government with support from the mutual sector.

It’s aim is to raise awareness of the employee owned business model which is already quite sizable, turning over around £30 billion and accounting for around 3 % of GDP.

There are pros and cons to ‘days’ like this. But one thing is for certain, now is a time to highlight the benefits of employee owned businesses.

A quick overview of recent management and businesses thinking (from people like Gary Hamel, Linda Gratton, Michael Porter, Bo Burlingham and others) brings to light some key ideas that are coming to define the way we think about, and do, business:

  •  To be productive, a business doesn’t just need good processes – it needs engaged employees who care about the business and share its vision
  •  As employees’ expectations change, leaders need to be adopt a more collaborative and participative style
  •  Innovation and product development should be welcome not only from the management and R&D  teams, but also from the wider workforce who have ideas and experience others don’t
  •  Long-term sustainability comes from putting the interests of stakeholders with an interest in the future of the business at its heart – the employees are the most significant stakeholders any business has, in this respect

Although it’s not said often enough, it’s blindingly obvious: employee owned businesses put these and many other new management ideas into practice, and have been doing for years.